Swartz Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.
|
|
Type of Textbook |
|
|
|
| Activity (Cost) |
Cost Driver |
Deluxe |
Moderate |
Economy |
| Machine maintenance ($259,600) |
Number of machine hours |
260 |
|
710 |
|
1,230 |
|
| Setups ($489,500) |
Number of setups |
23 |
|
12 |
|
8 |
|
| Packing ($126,100) |
Number of cartons |
11 |
|
30 |
|
56 |
|
| Photo development ($324,000) |
Number of pictures |
4,100 |
|
1,900 |
|
1,200 |
|
|
|
Deluxe textbooks are made with the finest-quality paper, six-color printing, and many photographs. Moderate texts are made with three colors and a few photographs spread throughout each chapter. Economy books are printed in black and white and include pictures only in chapter openings.
|
| a. |
Swartz currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year.
|
| Deluxe |
Moderate |
Economy |
| 42,000 |
158,000 |
196,000 |
|
|
Determine the overhead cost per book for each book type. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)
|
|
Deluxe |
Moderate |
Economy |
| Cost per book |
$ |
$ |
$ |
|
| b. |
Determine the overhead cost per book, assuming that the volume-based allocation system described in Requirement a is replaced with an activity-based costing system. (Round your answers to 2 decimal places.Omit the "$" sign in your response.)
|
|
Deluxe |
Moderate |
Economy |
| Cost per book |
$ |
$ |
$ |
|