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Assignment
Claire Company 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
Department Costs Cost Driver
Binding
$247,500
Number of units
Printing
796,250
Machine hours
Product design
195,000
Change orders
General
606,250
None
Total overhead costs
$1,845,000
Other information is as follows:
Tablets
Books
Units
62,500
20,000
Direct materials cost per unit
$3.00
$10.00
Direct labor cost per unit
$4.00
$8.00
Direct labor hours
25,000
16,000
125,000
120,000
1,250
2,000
Calculate predetermined OH rate.
Determine the unit product cost for Tablets and Books using the traditional costing system.
Calculate ABC rates.
Determine the unit product cost for Tablets and Books using the activity-based costing system.
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