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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. Type

Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.

Type of Textbook
Activity (Cost) Cost Driver Deluxe Moderate Economy
Machine maintenance ($370,000) Number of machine hours 370 1,110 1,480
Setups ($750,000) Number of setups 40 20 15
Packing ($190,000) Number of cartons 20 30 50
Photo development ($762,000) Number of pictures 5,900 3,900 2,900

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

Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year:

Deluxe Moderate Economy
50,000 150,000 200,000

Determine the overhead cost per book for each book type.

  1. 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. Note: For all requirements, round your answers to 2 decimal places.

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