Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis 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 (in excel file).

Production of 1,000 units of a small tractor tire required 200 labor hours, 2 setups, and consumed 10% of the product sustaining activities.

A. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much total overhead would have been allocated to the tractor tire?

B. How much total overhead costs will be allocated to the tire under activity-based costing?

C. The tire is priced on a cost plus basis. What price will be quoted if the product is priced at 25% above cost? Compute the price under both the direct labor hours approach and under activity-based costing. The direct manufacturing costs consist of direct material of $20 and direct labor of $30.

Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis 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 80,000 20,000 Cost 40,000 100,000 4,000 labor hrs Cost Driver 100 set ups of use 50,000 units Production of 1,000 units of a small tractor tire required 200 labor hours, 2 setups, and consumed 10% of the product sustaining activities. a. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much total overhead would have been allocated to the tractor tire