Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 800 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its $8,373,000 of annual manufacturing overhead. Of this amount, $2,160,000 is associated with the Large Bag line, $3,414,000 is associated with the Medium Bag line, and $2,799,000 is associated with the Small Bag line. Cooper's Bags Company is currently running a total of 41,000 machine hours: 12,700 in the Large Bag line, 16,300 in the Medium Bag line, and 12,000 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs. Which product line(s) have been overcosted or undercosted by using the plantwide manufacturing overhead rate?
Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 800 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide
Over costed means that total costs for a process is less but per unit cost is more charged as compared to total cost.
Under costed means that total costs for a process is more but per unit cost is less charged as compared to total cost.
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