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: Cost Driver Volume Activity Cost Driver Cost Pencils Pens Setting up Number of setups $ 96,900 19 32 Inspecting Number of parts 26,100 4 5 Packing and shipping Number of boxes shipped 55,000 45,000 65,000 Total overhead $ 178,000 Required: (a) Compute the amount of overhead to be allocated to each product under activity-based costing. (Do not round intermediate calculations. Round "Overhead" to the nearest whole dollar.)

overhead

pencils

pens

(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 45,000 boxes of pencils and 65,000 boxes of pens were produced during the period. (Do not round intermediate calculations. Round "Overhead" to the nearest whole dollar.)

overhead

pencils

pen