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Question - Jati Industries manufactures dining chairs and tables. The following information is available:
Dining Chairs
Tables
Total Cost
Machine setups
200
600
RM48,000
Inspections
250
470
RM72,000
Labor hours
2,600
2,400
Jati Industries is considering switching from one overhead rate based on labor hours to activity-based costing.
Required - Perform the following analyses for these two components of overhead:
a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.
b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing.
c. Comment on your findings.
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