Baird Company produces commercial gardening equipment. Since production is highly automated, the company allocates its...
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Baird Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Activities Unit Level Batch Level Product Level Facility Level Cost $ 70,200 $ 19,760 $ 19,000 $ 272,000 Cost driver 2,600 labor hrs. 38 setups Percentage of use 16,000 units Production of 840 sets of cutting shears, one of the companys 20 products, took 200 labor hours and 10 setups and consumed 12 percent of the product-sustaining activities. Required Had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 840 units are produced. If direct product costs are $200 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system?
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