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Managerial accounting

Please see the attached file.

1)Which cost driver for support overhead costs would you choose? Explain.

2) Chu anticipates 2,600 machines-hours and 300 batches for next month. Using the cost driver you chose in requirement 1, what amount of support overhead cost should Chu budget?

3) Chu adds 20% to costs to determine target revenues (and hence prices). Costs other than support overhead are expected to equal $125,000 next month. Compare the target revenue numbers obtained if the cost driver is (i) machine-hours or (ii) number of batches


Solution Summary

The solution evaluates two cost drivers and determines the best one.