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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

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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 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 $ 85,500 27,000 57,500 $170,000 Cost Driver Volume Pencils Pens 17 28 3 6 35,000 80,000 Required: a. Compute the amount of overhead to be allocated to each product under activity-based costing (Do not round intermediate calculations.) 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 0.1 for pens and that 35,000 boxes of pencils and 80.000 boxes of pens were produced during the period. (Do not round intermediate calculations.) Overhead Pencils Pens

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