Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.

Other information is as follows:

Required

a. Determine the unit product cost for Tablets and Books using the traditional costing system.

b. Determine the unit product cost for Tablets and Books using the activity-based costing system.

c. Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costingsystem.

Transcribed Image Text:

Cost Driver Number of units Machine hours Change orders None Activity Pool Binding Printing Product design General Total overhead costs Department Costs $ 247,500 796,250 195,000 606,250 $1,845,000