Refer to the data in Exercise 6-39. The president of Tiger Furnishings is confused about the differences

Question:

Refer to the data in Exercise 6-39. The president of Tiger Furnishings is confused about the differences in costs that result from using direct labor costs and machine-hours.

Required
a. Explain why the two product costs are different.
b. How would you respond to the president when asked to recommend one allocation base or the other?
c. The president says to choose the allocation base that results in the highest income. Is this an appropriate basis for choosing an allocation base?

Data From Exercise 6-39:

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

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Fundamentals of Cost Accounting

ISBN: 978-1259565403

5th edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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Question Posted: Apr 27, 2023 02:24 AM

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Refer to the data in Exercise 6-39. The president of Tiger Furnishings is confused about the differences

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a The two product costs are different because of the different allocation bases used to allocate man...View the full answer

Fundamentals of Cost Accounting

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