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Budgeted Service Department Cost Allocation: Pricing a New Product Fit & Active Company is adding a new diet food concentrate called Body Fit & Healthy to its line of bodybuilding and exercise products. A plant is being built for manufacturing the new product. Management has decided to price the new product based on a 100% markup on total manufacturing costs. A direct cost budget for the new plant projects that direct department costs of $11,444,000 will be incurred in producing an expected normal output of 750,000 pounds of finished product. In addition, indirect costs for Administration and Technical Support will be shared by Body Fit & Healthy with the two exercise products divisions, Commercial Products and Retail Products. Budgeted annual data to be used in making the allocations are summarized here. Technical Commercial Administration Support Products 10 70 690 1,840 Body Retail Fit & Products Healthy 60 20 1,610 460 Number of employees Amount of technical support time (hours) Direct costs are budgeted at $1,200,000 for the Administration Department and $800,000 for the Technical Support Department. Required a. Using the step method, determine the total direct and indirect costs of Body Fit & Healthy. (Administration costs are allocated based on number of employees; Technical Support costs are allocated based on technical support time.) Body Fit & Healthy Direct costs Indirect costs: Technical support Administrative support Total $ b. Determine the selling price per pound of Body Fit & Healthy. Note: Round your answer to two decimal places (for example, round $8.55555 to $8.56). per pound

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