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Spiro Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs
Spiro Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow Activities Cost Cost driver Unit Level Batch Level $23,030 1,800 labor hrs. 47 setups Product Level $18,000 Percentage of use Facility Level $252,000 14,000 units $39,600 Production of 710 sets of cutting shears, one of the company's 20 products, took 140 labor hours and 5 setups and consumed 14 percent of the product-sustaining activities Required: a. Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? (Round intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.) Allocated cost b. How much overhead is allocated to the cutting shears using activity-based costing? (Round your answer to the nearest dollar amount.) Allocated cost
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