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Drilling Innovations: Traditional vs. Activity Based Costing

Drilling Innovations : Traditional versus Activity Based Costing

Describe the production characteristics (for example, high-volume, specialty, etc.) of the three products manufactured by Drilling Innovations, Inc. in our case study.

Describe the characteristics of products which would suggest it would be better to use ABC as an indirect cost allocation method over a traditional method such as direct labor hours.

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Describe the production characteristics (for example, high-volume, specialty, etc.) of the three products manufactured by Drilling Innovations, Inc. in our case study.

GS-157 is a high volume product (120,000 units is much more than the other two). The ABC cost is below the traditional cost because the product likely enjoys larger batches and so batch setup costs and ...

Solution Summary

Your discussion is 245 words and describes the production characteristics of each product and why one method would be more suitable.

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