Solution-Overhead allocation base for both lines

Overhead allocation base for both lines

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Reference no: EM131024700

The Carolina Furniture Company manufactures kitchen cabinets. The company has always used direct labor cost to allocate overhead to its two cabinet lines, Heritage and Contemporary. The manufacture of both lines has been labor intensive. Recently, the company automated production of its Contemporary line of cabinets. It continues to use labor dollars as the overhead allocation base for both lines. This practice will likely result in which of the following?

a. Overhead cost will be allocated accurately between the two lines.

b. Too much overhead cost will be allocated to the Heritage line.

c. Too much overhead cost will be allocated to the Contemporary line. d. b and c.

Reference no: EM131024700

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Overhead allocation base for both lines

Reference no: EM131024700

Reference no: EM131024700

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