Question: ABC Company has identified three activity cost pools: Ordering, Setup, and Machine Usage. The total overhead costs are $500,000, with activity levels as follows: Ordering

ABC Company has identified three activity cost pools: Ordering, Setup, and Machine Usage. The total overhead costs are $500,000, with activity levels as follows: Ordering - 1,000 orders, Setup - 500 setups, Machine Usage - 2,000 machine hours. Allocate the overhead costs to each activity using the ABC method and discuss how this information can aid in cost management decisions.

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