Question

Refer to Exercise. For 2015, Elton’s managers have decided to use the same indirect manufacturing costs per wheel rim that they computed in 2014. In addition to the unit indirect manufacturing costs, the following data are expected for the company’s standard and deluxe models for 2015:


Because of limited machine- hour capacity, Elton can produce either 2,000 standard rims or 2,000 deluxe rims.

Requirements
1. If Elton’s managers rely on the ABC unit cost data computed in Exercise, which model will they produce? Carry each cost to the nearest cent. (Ignore selling and administrative expenses for this calculation.)
2. If the managers rely on the single plantwide allocation rate cost data, which model will they produce?
3. Which course of action will yield more income forElton?


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  • CreatedJanuary 16, 2015
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