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Jay Krue makes two products, Simple and Complex. As their names suggest, Simple is the mor

Jay Krue makes two products, Simple and Complex. As their names suggest, Simple is the mor

Jay Krue makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes with all the bells and whistles. The company has always allocated overhead costs to products based on machine hours. Last year, the company implemented an activity-based costing system, and managers determined the following activity pools and rates based on total overhead of $1,579,200:

Rate Assembly $1.25 per direct labor hour, Fabrication $9.75 per machine hour, Setups $18 per batch, Bonding $210,750 direct to Complex

Only the Complex product requires bonding, so all the costs of bonding should be allocated to Complex. The following data relate to both products.

 

 

Simple

 

Complex

Units produced

 

128,000

 

48,000

Direct labor hours

 

231,000

 

102,000

Machine hours

 

53,000

 

31,000

Batches

 

2,600

 

4,800

Abhinav 04-Dec-2019

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