Question: Jarme Company makes two products and is implementing an activity-based costing (ABC) system. Previously, all overhead had been applied on the basis of machine hours.
Jarme Company makes two products and is implementing an activity-based costing (ABC) system. Previously, all overhead had been applied on the basis of machine hours. The company produces 100,000 units of product D and 5,000 units of product F annually. Cost Pool Driver and Level Cost in Pool Use of Driver by Product D Use of Driver by Product F Equipment Setup 500 setups $1,000,000 350 setups 150 setups Materials Ordering 10,000 orders $2,000,000 7,000 orders 3,000 orders Quality Control 4,000 Insp $500,000 2,000 Insp 2,000 Insp Machining 50,000 MH $5,000,000 40,000 MH 10,000 MH * MH Machine Hours Insp Inspections Ship - Shipments Using ABC, what is the cost per machine hour in the Machining pool?
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