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Cost Munoz Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing The
Cost Munoz 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 Unit Level Batch Level Product Level Facility Level $ 30,000 $19,140 $ 16, eee $247, eee Cost driver 1,200 labor hrs. 33 setups Percentage of use 19,00 units Production of 870 sets of cutting shears, one of the company's 20 products, took 300 labor hours and 6 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 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 870 units are produced. If direct product costs are $160 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system
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