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Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?

Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?

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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Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
Transcribed Image Text:Hoger Corporation accumulated the following cost information for its two products, A and B: A B Total Production volume 2,000 1,000 Total direct man. labor hrs. 5,000 20,000 Setup cost per batch $1,000 $2,000 Batch size 100 50 Total setup costs incurred $20,000 DMLH per unit 2 $40,000 1 A traditional costing system would allocate setup costs on the basis of DMLH. An ABC system would trace costs by spreading the costs per batch over the units in a batch. What is the setup cost per unit of product A under each costing system?
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