IBM implements activity based costing (ABC) for its software development division In October 2038, the company identifies the following cost drivers and activities Software Development Hours 50,000 hours Testing Hours 20,000 hours Overhead Costs $10,000,000 Requirements Allocate overhead costs using activity based costing Calculate the cost per activity Prepare a cost allocation report Analyze the benefits of using ABC over traditional costing methods Recommend process improvements based on ABC analysis

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Question: IBM implements activity-based costing (ABC) for its software development division. In October 2038, the company identifies the following cost drivers and activities: Software Development Hours:

IBM implements activity-based costing (ABC) for its software development division. In October 2038, the company identifies the following cost drivers and activities:

Software Development Hours: 50,000 hours
Testing Hours: 20,000 hours
Overhead Costs: $10,000,000

Requirements:

Allocate overhead costs using activity-based costing.
Calculate the cost per activity.
Prepare a cost allocation report.
Analyze the benefits of using ABC over traditional costing methods.
Recommend process improvements based on ABC analysis.

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