Question
Isadores Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended
Isadores Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended an activity-based costing system using the following data: Cost Driver Volume Activity Cost Driver Cost Pencils Pens Setting up
Number of setups $ 95,000 23 27
Inspecting Number of parts 25,600 3 5
Packing and shipping Number of boxes shipped 50,000 40,000 85,000
Total overhead $ 170,600 Required:
a. Compute the amount of overhead to be allocated to each product under activity-based costing. (Do not round intermediate calculations.)
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