Murphey Dental Company manufactures dental instruments. The company's product line includes products as simple as dental picks and products as complex as panoramic x-ray machines. Mace Edison, a senior product manager responsible for implementing an activity-based costing system at Murphey, identified the following three activity cost pools: assembling, packaging, and designing. Mace also investigated the components of overhead cost and determined that each cost is split among the three cost pools based on the following percentages.

a. Using the percentages above, calculate the costs included in each of the three activity cost pools.
b. Why might Mace have felt the need to implement an activity-based costing system? Be sure to consider how costs are incurred within the threecategories.

  • CreatedFebruary 21, 2014
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