In comparing the traditional system with the activity-based costing system, which of Ergaster’s models had higher unit product costs under the traditional system? Based on this problem: Ergaster Corporation manufactures a variety of products. In the past, Ergaster has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Ergaster has decided to switch to an activity based costing system for manufacturing overhead costs using three activity cost pools. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year is as follows: (see image) 11. Under the activity-based costing system, what would be the selling price of one unit of Model #36?
In comparing the traditional system with the activity-based costing system, which of Ergaster’s models had higher unit product costs under the traditional system? Based on this problem:
Ergaster Corporation manufactures a variety of products. In the past, Ergaster has been using a traditional costing system in which the predetermined
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