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oadster Tires produces a variety of auto and truck tires at its Dayton manufacturing plant. The plant is highly automated and uses an activity-based costing

oadster Tires produces a variety of auto and truck tires at its Dayton manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The costs and cost drivers associated with four activity cost pools are given below:

Activities: Unit Level Batch Level Product Level Facility Level
Cost $20,000 $50,000 $60,000 $100,000
Cost Driver 2500 labor hours 100 set ups % of use 20,000 units

Production of 500 units of a small tractor tire required 200 labor hours, 2 setups, and consumed 15% of the product sustaining activities.

Overhead allocated using direct labor would be :

Overhead allocated using activity based costing would be

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