Skinner Shoes Corporation produces three brands of shoes: Brisk, Pro, and Runner. Relevant information about Skinner's overhead activities, their respective costs, and their cost drivers follows:

Required
a. Skinner currently allocates all overhead costs based on labor hours. The company produced the following numbers of pairs of shoes during the prior year:
Brisk Pro Runner
10,000.......12,000........20,000
Determine the overhead cost per pair of shoes for each brand.
b. Determine the overhead cost per pair of shoes for each brand, assuming that the volume-based allocation system described in Requirement a is replaced with an activity-based costing system. Round your figures to two decimal points.
c. Explain why the per-pair overhead costs determined in Requirements a and b differ.

Transcribed Image Text:

Cost Driver Brisk Pro Runner Overhead Costs 22,000 25 1 20) 200 8,000 15 20,000 10 Fringe benefits ($200,000) Setups ($120,000) Packing costs($80,000) Quality control ($200,000) Labor hours Number of setups Number of cartons Number of tests 1,900 80 120