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	$	72,000		20	30
Inspecting	Number of parts		21,600		4	6
Packing and shipping	Number of boxes shipped		43,200		45,000	75,000
Total overhead		$	136,800

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 0.2 for pens and that 45,000 boxes of pencils and 75,000 boxes of pens were produced during the period.