Nichols Inc. manufactures remote controls. Currently the company uses a plantâwide rate for allocating manufacturing overhead. The plant manager is considering switchingâover to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are asâ follows: Activities Cost driver Allocation Rate Material handling Number of parts $5 per part Assembly Labor hours $20 per hour Inspection Time at inspection station $10 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour. What are the indirect manufacturing costs per remote control assuming an activityâbasedâcosting method is used and a batch of 100 remote controls areâ produced? The batch requires 460 âparts, 5 direct manufacturing laborâ hours, and 17 minutes of inspection time.
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Nichols Inc. manufactures remote controls. Currently the company uses a plantâwide rate for allocati...
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