Skinner Shoes Corporation produces three brands of shoes: Brisk, Pro, and Runner. Relevant information about Skinners overhead activities, their respective costs, and their cost drivers follows:

a. Skinner currently allocates all overhead costs based on labor hours. The company produced the following numbers of pairs of shoes during the prior year: Determine the overhead cost per pair of shoes for each brand.

b. Determine the overhead cost per pair of shoes for each brand, assuming that the volume-based allocation system described in Requirement a is replaced with an activity-based costing system. Round your figures to two decimal points.

c. Explain why the per-pair overhead costs determined in Requirements a and b differ.

Brisk Pro Runner Overhead Costs Fringe benefits ($200,000) Setups ($120,000) Packing costs ($80,000) Quality control ($200,000) Cost Driver Labor hours Number of setups Number of cartons Number of tests 8.000 15 900 120 22.000 25 1.200 200 20,000 10 1.900 80 Brisk Pro Runner 10,000 12,000 20,000