Question 2

9:02 AM Wed 9 Dec '6 26% {E} X test 1.pdf @- LT'I Question 2 Jati Industries manufactures dining chairs and tables. The following information is available: Dining Chairs Tables Total Cost Machine setups 200 600 RM48,000 Inspections 250 470 RM72,000 Labor hours 2,600 2,400 Jati Industries is considering switching from one overhead rate based on labor hours to activity-based costing. Required: Perform the following analyses for these two components of overhead: a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate. b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing. c. Comment on your findings. (20 Marks)