Stockin 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 |
$229,687.50 |
Number of units |
| Printing |
787,167.50 |
Machine hours |
| Product design |
207,468.00 |
Change orders |
| General |
728,677.00 |
None |
| Total overhead costs |
$1,953,000.00 |
Other information is as follows:
| Tablets |
Books |
| Units |
73,500 |
18,375 |
| Direct materials cost per unit |
$4.00 |
$12.00 |
| Direct labor cost per unit |
$5.00 |
$10.00 |
| Direct labor hours |
31,000 |
15,500 |
| Machine hours |
145,100 |
108,825 |
| Change orders |
1,921 |
3,842 |
(a) Determine the unit product cost for Tablets using the traditional costing system.
(b) Determine the unit product cost for Tablets using the activity-based costing system.