MedTech. Inc., manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was

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MedTech. Inc., manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $20 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 400000 units for the year:

MedTech. Inc., manufactures and sells diagnostic equipment used in the

The following production, costs, and activities occurred during the month of August:

MedTech. Inc., manufactures and sells diagnostic equipment used in the

Required:
a. Calculate the total manufacturing costs and the cost per unit produced and tested during the month of August for Med Tech. Inc.
b. Explain the advantages of the ABC approach relative to using a single predetermined overhead application rate based on direct labor hours.

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Accounting What the Numbers Mean

ISBN: 978-1259535314

11th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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