50.1K

Verified Solution

Link Copied!

Isadore's Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended an activity-based costing system using the following data: Cost Driver Volume Activity Cost Driver Cost Pencils Pens Setting up Number of setups $100,000 24 26 Inspecting Number of parts 38,400 5 7 Packing and shipping Number of boxes shipped 57,500 45,000 70,000 Total overhead $195,900 Required: a. Compute the amount of overhead to be allocated to each product under activity-based costing. b. Compute the amount of overhead to be allocated to each product using labor-hours as the allocation base. Assume that the number of labor-hours required to assemble each box is 0.2 for pencils and 0.1 for pens and that 45,000 boxes of pencils and 70,000 boxes of pens were produced during the period. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of overhead to be allocated to each product under activity based costing. (Do not round Intermediate calculations.) Overhead Pencils Pens Required A Required B Compute the amount of overhead to be allocated to each product using labor-hours as the allocation base. Assume that the number of labor-hours required to assemble each box is 0.2 for pencils and 0.1 for pens and that 45,000 boxes of pencils and 70,000 boxes of pens were produced during the period. (Do not round intermediate calculations and round your final answers to the nearest whole dollar) Show less Overhead Pencils Pens

Answer & Explanation Solved by verified expert

See Answer