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Question - A company has two products: standard and deluxe. The company expects to produce 36,375 standard units and 62,240 deluxe units. It uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each of its three activity cost pools.
Activity Cost Pool
Budgeted Cost
Budgeted Activity of Cost Driver
Standard
Deluxe
Activity 1
$93,000
2,500
5,250
Activity 2
$92,000
4,500
5,500
Activity 3
$87,000
3,000
2,800
Required:
1. Compute overhead rates for each of the three activities.
2. What is the expected overhead cost per unit for the standard units?
3. What is the expected overhead cost per unit for the deluxe units?
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