Jason Anderson had been allocating MOH costs to his products using a single plant-wide rate of $14.00 per DL hour. His accountants were now suggesting the use of the following activity-based rates. $20 per production run $7 per direct labor hour $5 per inspection hour If the most recent job required 60 production runs, 450 DL hours, and 30 inspection hours, specify how much MOH cost would have been allocated under the previous plant-wide rate, as well as what would be allocated using the suggested ABC rates. Allocation using plant-wide rate $ Allocation using ABC rates Which of these approaches is likely the most accurate? ABC is likely the most accurate.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Jason Anderson had been allocating MOH costs to his products using a single plant-wide rate of $14.00 per DL hour. His accountants
were now suggesting the use of the following activity-based rates.
$20 per production run
$7 per direct labor hour
$5 per inspection hour
If the most recent job required 60 production runs, 450 DL hours, and 30 inspection hours, specify how much MOH cost would have
been allocated under the previous plant-wide rate, as well as what would be allocated using the suggested ABC rates.
Allocation using plant-wide rate $
Allocation using ABC rates
$
Which of these approaches is likely the most accurate?
ABC
is likely the most accurate.
Transcribed Image Text:Jason Anderson had been allocating MOH costs to his products using a single plant-wide rate of $14.00 per DL hour. His accountants were now suggesting the use of the following activity-based rates. $20 per production run $7 per direct labor hour $5 per inspection hour If the most recent job required 60 production runs, 450 DL hours, and 30 inspection hours, specify how much MOH cost would have been allocated under the previous plant-wide rate, as well as what would be allocated using the suggested ABC rates. Allocation using plant-wide rate $ Allocation using ABC rates $ Which of these approaches is likely the most accurate? ABC is likely the most accurate.
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