Problem 7-20 claire company produces tablets and books. total

Problem 7-20 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

Machine hours

125,000

120,000

Change orders

1,250

2,000