Wykle Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow.
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Activities |
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Unit Level |
Batch Level |
Product Level |
Facility Level |
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Cost |
$52,500 |
$15,540 |
$15,000 |
$260,000 |
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Cost driver |
2,100 labor hrs. |
37 setups |
Percentage of use |
13,000 units |
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Production of 890 sets of cutting shears, one of the company's 20 products, took 300 labor hours and 8 setups and consumed 19 percent of the product-sustaining activities.
| b. |
How much overhead is allocated to the cutting shears using activity-based costing? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)
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| c. |
Compute the overhead cost per unit for cutting shears using first activity-based costing and then using direct labor hours for allocation if 890 units are produced. If direct product costs are $150 and the product is priced at 25 percent above cost, for what price would the product sell under each allocation system? (Round intermediate calculations to the nearest dollar amount and final answers to 2 decimal places. Omit the "$" sign in your response.)
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ABC |
Labor Hrs |
| Allocated overhead |
$ |
$ |
| Direct cost |
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| Total cost per unit |
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| Desired profit |
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| Sales price |
$ |
$ |
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