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A manufacturing company which produces a range of products has developed a budget for the life-cycle of a new
product, P. The information in the following table relates exclusively to product P:
The company’s total fixed production overheads are budgeted to be $72 million each year and total machine hours
are budgeted to be 96 million hours. The company absorbs overheads on a machine hour basis.
What is the budgeted life-cycle cost per unit for product P?
A $24·40
B $25·73
C $27·40
D $22·73
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