Answer - A
Planned units of production for two products should be the basis of overhead allocation since the processing time for both is different and there is an impact on the overall overhead cost of 5% increase because of new product.
Answer - B
O/H share for DOLLS = 203600/(352800+25200)*352800 = 190,027
Rate per unit for DOLLS = 190027 / 352800 = 0.54
O/H share for REPLICA = 203600/(352800+25200)*25200 = 13,573
Rate per unit for REPLICA = 13573 / 25200 = 0.54
Answer - C
Cost of Production is as hereunder
Total O/H absorbed = 186371 + 13608 = 199979
Hence underabsorption of = 203600 - 199979 = 3621
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