Question: Revising a time-driven ABC system, cost increases, and process changes Refer to the time-driven ABC analysis of the Madison Dairy ice cream plant example in

Revising a time-driven ABC system, cost increases, and process changes Refer to the time-driven ABC analysis of the Madison Dairy ice cream plant example in the chapter. Required
(a) Suppose indirect labor costs have increased by 10% from the original setting but all other information remains the same. Determine the total time-driven activity-based costs assigned to each of the four products (flavors) after incorporating the 10% increase in indirect labor costs and prepare an income statement similar to that shown in Exhibit 5-5.
(b) Suppose that in addition to the change in part a, the unit time for scheduling a production run decreased from four hours per run to three hours per run. Determine the new total timedriven activity-based costs assigned to each of the four products (flavors) and prepare an income statement similar to that shown in Exhibit but also showing the total cost of unused capacity.

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a A 10 increase in indirect labor costs will increase the indirect labor capacity cost rate by 10 from 35 to 3850 and therefore will increase the indi... View full answer

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