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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.Deluxe textbooks
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.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.
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. e of Textbook Deluxe Activity (Cost) Cost Driver Moderate Economy Number of machine hours Machine maintenance ($360,000) 300 900 1,200 Number of setups Setups ($780,000) 15 10 Packing ($196,000) Number of cartons 20 50 70 Photo development ($512,000) Number of pictures 3,800 1,800 800 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: Economy Deluxe Moderate 180,000 240,000 60,000 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. (For a requirements, round your answers to 2 decimal places.) Deluxe Moderate Economy a. Cost per book (volume-based allocation) b. Cost per book (activity-based costing)Step by Step Solution
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