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Question 1: Green Company sells its product for $10800 per unit. Variable costs per unit are: manufacturing, $5000; and selling and administrative, $120. Fixed costs are: $33600 manufacturing overhead, and $43600 selling and administrative. There was no beginning inventory at 1/1/18. Production was 24 units per year in 2018-2020. Sales were 24 units in 2018, 20 units in 2019, and 28 units in 2020. Income under absorption costing for 2019 is
Option 1: $36400.
Option 2: $42000.
Option 3: $44400.
Option 4: $78400.
Justify the selection of an appropriate allocation base, and calculate the predetermined overhead allocation rate.
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Circuit boards of this are not available from outside sources. What should Division A do from the standpoint of the company as a whole?
What quantitative and qualitative factors would influence your decision?
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