5 ABC overhead calculation LO3 Shoehorn Company sells two types of shoes -budget shoes and premium shoes. Though only recently introducing premium shoes, the company is astounded by the profit margin on that product. On the other hand, the returms on the budget shoes have declined since premium shoes started being made and sold. The expected production and sales are 1000 premium shoes and 20000 budget shoes. Company management is concemed at the traditional overhead cost allocation system being used to cost overhead into the shoes and accumulated the following data from last year in order to conduct an activity- based costing overhead allocation: Gr sy ac Activity Allocation base Purchasing Number of purchase orders Stitching Metres stitched Sales Overhead cost 200000 $100000 200000 Number of sales orders The numbers of activities for budget shoes and premium shoes are as follows: Purchase orders Centimetres stitched Sales orders Budget 7000 8000 8000 Premium 3000 2000 2000 Required a Calculate the overhead rates for the following activities: purchasing, stitching and sales orders. Calculate the dollar amount of overhead that should be assigned to a budget shoe and a premium shoe, under the ABC system. b