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Swifty Visuals produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers
Swifty Visuals produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products. Activity Pool Binding Printing Product design General Total overhead costs Department Costs $297,000 955,500 234.000 727,500 Cost Driver Number of units Machine hours Change orders None $2,214,000 Other information is as follows: Tablets Books 30,000 Units $10 Direct materials cost per unit Direct labor cost per unit Direct labor hours Machine hours Change orders 62,500 $3.00 $7 30,000 150.000 $14.00 19,200 144,000 2,400 1,500 Swifty's managers have gathered the following information about selling and administrative costs. Activity Pool Shipping Advertising Commissions Total selling and administrative costs Total Cost $300,000 187,500 168,125 $655,625 Cost Driver Pounds shipped Number of mailings Sales price Weight Advertising mailings Sales commission Selling price per unit Tablets 20,000 pounds 25,000 5% of sales price $35 Books 40,000 pounds 100,000 8.00% of sales price $75 Prepare a report like the one in Exhibit 7-12, Panel A. (Round % of total margin to 1 decimal place, e.g. 15.2%.) Tablets Books $ $ $ Sales price Product costs $ $ Product margin Unit sales $ $ $ $ Total margin % % % of total margin
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