Question: please help me with #4 Chapter 5 - ABC - In-class problem Use the following information to answer Exercises 1-4. After preparing the budget for
Chapter 5 - ABC - In-class problem Use the following information to answer Exercises 1-4. After preparing the budget for the next year, management at Fun4U Inc. expects the following overhead costs (the cost driver for each overhead cost pool is also shown): Activity Maintenance Materials receiving Machine setups Inspection Total Cost $50,000 $120,000 $30,000 $20,000 Cost Driver Machine hours Shipments received # of setups # of inspections The expected activity for the year for various cost drivers is: Direct Labor Hours 30,000 Machine-hours 10,000 Shipments Received 150 Setups 300 Quality inspections 100 The company is considering accepting a significant production contract. Estimates for the contract are as follows: Direct materials Direct labor (5,000 hours) Number of material shipments received Number of inspections Number of setups Number of machine-hours $50,000 $75,000 6 5 12 1,000 - 4. Is the company more likely to accept the contract under Activity-Based Costing or using a company-wide rate? (Round all per-unit costs to the nearest cent.)
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