Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended an activity-based costing system using the following data: Cost Driver Volume Activity Cost Driver Cost Pencils Pens Setting up Number of setups $ 96,900 22 29 Inspecting Number of parts 32,000 4 6 Packing and shipping Number of boxes shipped 46,000 50,000 65,000 Total overhead $ 174,900 

Required: 

a. Compute the amount of overhead to be allocated to each product under activity-based costing. 

b. Compute the amount of overhead to be allocated to each product using labor-hours as the allocation base. Assume that the number of labor-hours required to assemble each box is 0.1 for pencils and 0.2 for pens and that 50,000 boxes of pencils and 65,000 boxes of pens were produced during the period.