Homework Answers
Answer
B. The current Costing system is not under costing or over costing the products.
Explanation:
Under tradtuional Costing,
Machine setp cost to Digital (%) = 1,500 hours / (1,500 + 2,500) = 37.5%
Under ABC Costing.
Machine setp cost to Digital (%) = 30 setups / (30+ 50) = 37.5%
Note :
Machine setup for Digital = 750 / 25 = 30 setups
Machine setup for Analog= 500 / 10 = 50 setups
In case of any doubt, please comment.
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