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Baird Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs
Baird Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Activities Product Level Facility Level $156,000 Unit Level Batch Level $ 55,200 2,300 labor hrs $19,610 37 setups Cost $14,000 Cost driver 12,000 units Percentage of use Production of 850 sets of cutting shears, one of the company's 20 products, took 140 labor hours and 10 setups and consumed 15 percent of the product-sustaining activities Required a. Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 850 units are produced. If direct product costs are $160 and the product is priced at 25 percent above cost for what price would the product sell under each allocation system? Complete this question by entering your answers in the tabs below. Req C Req A and B Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? (Round intermediate calculations to 2 decimal places. Round your final answers to the nearest whole dollar amount. ) Allocated cost b. Allocated cost
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