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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 Setting up Inspecting Packing and shipping Total overhead Cost Driver Number of setups Number of parts Number of boxes shipped Cost $114,400 26,100 75,000 $215,500 Cost Driver Volume Pencils Pens 19 33 3 6 55,000 70,000 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 numbe of labor-hours required to assemble each box is 0.2 for pencils and 0.2 for pens and that 55,000 boxes of pencils and 70,000 boxes 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 using labor-hours as the allocation base. Assume that the number of labor-hours required to assemble each box is 0.2 for pencils and 0.2 for pens and that 55,000 boxes of pencils and 70,000 boxes of pens were produced during the period. (Do not round intermediate calculations and round your final answers to the nearest whole dollar.) Show less Overhead Pencils Pens
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