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Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Activity
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Activity (Cost) Machine maintenance ($ 420,000) Setups ($ 720,000) Packing ($184,000) Photo development ($500,000) Cost Driver Number of machine hours Number of setups Number of cartons Number of pictures Type of Textbook Deluxe Moderate Economy 300 900 1,200 35 10 5 10 30 60 5,000 3,000 2,000 Deluxe textbooks are made with the finest-quality paper, six-color printing, and many photographs. Moderate texts are made with three colors and a few photographs spread throughout each chapter. Economy books are printed in black and white and include pictures only in chapter openings. Required a. Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year: Deluxe 60,000 Moderate 180,000 Economy 240,000 Determine the overhead cost per book for each book type. b. Determine the overhead cost per book, assuming that the volume-based allocation system described in Requirement a is replaced with an activity-based costing system. Economy (For all requirements, round your answers to 2 decimal places.) Deluxe Moderate Cost per book (volume-based allocation) b. Cost per book (activity-based costing) a
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