Northwest Company produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.

Northwest’s controller wishes to apply activity-based costing (ABC) to allocate the $108,000 of overhead costs incurred hy the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines.

Required 1. Assign these three overhead cost pools to each of the two products using ABC.
2. Determine average cost per foot for each of the two products using ABC.
3. Compare the average cost per foot under ABC with the average cost per foot under the current method for each product. Explain why a difference between the two cost allocation methods exists.

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Direct materials Direct labor.... Overhead (300% of direct labor cost) Total cost.... Quantity produced Average cost per ft. (rounded) $19,000 12,200 36,600 Rounded Edge Squared Edge $ 43,200 23,800 71,400 Total $ 62,200 36,000 108,000 $67,800 $138,400 $206,200 10,500 ft. 14,100 ft. $ 6.46 $ 9.82