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Traditional vs. ABC Example

Traditional vs. ABC Example. Data ( 2 products). The Boot. The Club. 5,000 units expected Direct material $ 30 1 hour Direct labor @ $12 per hour Overhead cost $ 30 per DLH. 25,000 units expected Direct Materials $ 40 1 hour Direct labor @ $12 per hour Overhead cost $ 30 per DLH.

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Traditional vs. ABC Example

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  1. Traditional vs. ABC Example

  2. Data ( 2 products) The Boot The Club 5,000 units expected Direct material $ 30 1 hour Direct labor @ $12 per hour Overhead cost $ 30 per DLH • 25,000 units expected • Direct Materials $ 40 • 1 hour Direct labor @ $12 per hour • Overhead cost $ 30 per DLH Overhead rate applied on basis of Direct labor Hours(DLH)Rate based on $900,000 expected cost ÷ 30,000 DLH = $30 per DLH

  3. Overhead Rates Using ABC

  4. Assigning Overhead Costs Under ABC

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