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Exercise 2 on ABC: The following information is available: Total Overheads $ 100 000 Costs relating to set ups 70% of overheads Costs relating to inspections 30% of overheads No of set ups No of inspections 100 setups 50 inspections a) Calculate the cost per driver (Cost Driver Rate) To produce product A No of set ups No of inspections 20 setups 3 inspections (Note the cost driver rate is the activity rate) b) Calculate the total overheads applicable to Product A.

Exercise 2 on ABC: The following information is available: Total Overheads $ 100 000 Costs relating to set ups 70% of overheads Costs relating to inspections 30% of overheads No of set ups No of inspections 100 setups 50 inspections a) Calculate the cost per driver (Cost Driver Rate) To produce product A No of set ups No of inspections 20 setups 3 inspections (Note the cost driver rate is the activity rate) b) Calculate the total overheads applicable to Product A.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 2 on ABC: The following information is available: Total Overheads $ 100 000 Costs relating to set ups 70% of overheads Costs relating to inspections 30% of overheads No of set ups No of inspections 100 setups 50 inspections a) Calculate the cost per driver (Cost Driver Rate) To produce product A No of set ups No of inspections 20 setups 3 inspections (Note the cost driver rate is the activity rate) b) Calculate the total overheads applicable to Product A.
Transcribed Image Text:Exercise 2 on ABC: The following information is available: Total Overheads $ 100 000 Costs relating to set ups 70% of overheads Costs relating to inspections 30% of overheads No of set ups No of inspections 100 setups 50 inspections a) Calculate the cost per driver (Cost Driver Rate) To produce product A No of set ups No of inspections 20 setups 3 inspections (Note the cost driver rate is the activity rate) b) Calculate the total overheads applicable to Product A.
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