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Isadore's 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
Isadore's 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: Activity Cost Driver Volume Cost Driver Cost Pencils Pens Setting up Inspecting Number of setups Number of parts $ 96,000 20 28 Packing and shipping Number of boxes shipped Total overhead 31,000 50,000 $177,000 4 50,000 75,000 6 Required: a. Compute the amount of overhead to be allocated to each product under activity-based costing. b. Compute the amount of overhead to be allocated to each product using labor-hours as the allocation base. Assume that the number of labor-hours required to assemble each box is 0.1 for pencils and 0.1 for pens and that 50,000 boxes of pencils and 75,000 boxes of pens were produced during the period. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of overhead to be allocated to each product under activity-based costing. (Do not round intermediate calculations.) Pencils Pens Overhead
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