Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently...

				Cost Driver Volume
Activity	Cost Driver	Cost		Pencils	Pens
Setting up	Number of setups	$	72,000	20	30
Inspecting	Number of parts		21,600	4	6
Packing and shipping	Number of boxes shipped		43,200	45,000	75,000
Total overhead		$	136,800

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 45,000 boxes of pencils and 75,000 boxes of pens were produced during the period.

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Expert Solution

The answer has been presenetd in the supporting sheet. For detailed answer refer to the supporting sheet.

ekkarill92 answered 11 months ago

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