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    Allocation rate per order, forecasted productions units for Norah Co

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    Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:

    Product Number of Setups Machine Hours Packing Orders
    X 10 500 75
    Y 10 2,000 175

    Cost per pool $9,000 $60,000 $15,000

    What is the allocation rate per packing order using activity-based costing?
    1- $15,000
    2- $60
    3- $7,500
    4- $200

    The following forecasted sales pertain to Norah Company:

    Month Sales
    April $200,000
    May 250,000
    June 150,000
    July 100,000

    Collection pattern:
    60 percent in month of sale
    40 percent in month following the sale

    Accounts receivable as of March 31 $35,000
    Finished goods inventory as of March 31 4,000 units

    The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.

    How many units are expected to be produced in April?
    a- 21,000 units
    b- 19,000 units
    c- 25,000 units
    d- 20,000 units

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    Solution Summary

    Allocation rate per order and the forecasted production units for Nora are examined.