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Preview File Edit View Go Tools Window Help Q Mon Sep 20 7:32 PM D Screen Shot 2021-09-20 at 9.31.13 AM Edited Q Search + G Update 9 Reading List 2. Sweetheart Brands packages single-sized servings of sugar and sugar substitute for fast food restaurants. The activities required to package sugar are fewer and less complex than for sugar substitute. The direct costs of producing the two products are as follows: Sugar $ Direct materials Direct labor Sugar Substitute 0.02 $ 0.04 0.04 0.08 20 Overhead is currently assigned to the two products based on machine hours. The following information is provided regarding overhead costs: BOOOOOO0CRO ECO00 a. Activity Setup Packing Inspection Traceable Costs Cost Driver $50,000 No. of setups 120,000 No. of machine hrs. 30,000 No. of batches $200.000 Sugar Line 125 10.000 250 Sugar Sub. Line 125 40,000 350 Tota! 250 50.000 600 Required: 1) Compute the predetermined overhead rate under the current method of overhead cost allocation. How much total overhead cost will be assigned to each product under the current system? 2) Compute the three activity rates that would be used in an activity-based system. How much total overhead cost will be assigned to each product under an ABC system? 3) Assuming an ABC system to be more precise, by how much does the company's current costing system over- or undercost the products? Be specific

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