Calculate the unit manufacturing costs of the basic custom DVD models using traditional absorption costing. Manufacturing overhead is allocated based on direct labor dollars. b. DVDS hires a consulting firm to analyze its costings methods. After performing an extensive review, the consultants determine the the vast majority of the $2 million dollars of overhead varies with the number of different parts in the two DVD models. The number of parts drives purchasing department activities. More engineering time is spent on more complex Custom DVD models. More accounting depreciation of assembly and testing equipment is incurred producing the custom DVD model than the basic DVD model.

Calculate the unit manufacturing costs of the basic custom DVD models using traditional absorption costing. Manufacturing overhead is allocated based on direct labor dollars. b. DVDS hires a consulting firm to analyze its costings methods. After performing an extensive review, the consultants determine the the vast majority of the $2 million dollars of overhead varies with the number of different parts in the two DVD models. The number of parts drives purchasing department activities. More engineering time is spent on more complex Custom DVD models. More accounting depreciation of assembly and testing equipment is incurred producing the custom DVD model than the basic DVD model. The basic DVD model has 140 different parts and the custom DVD model has 160 different parts. Calculate the unit manufacturing costs of the basic and custom DVD models using activity based costing. c. Should DVDS change it s costing methodology from its traditional absorption costing to ABC? Explain why it should or should not.








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