Wallace Publishing identified the following overhead activities, their respectiv
ID: 2462992 • Letter: W
Question
Wallace Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.
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.
Wallace currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year.
Determine the overhead cost per book for each book type. (Round your answers to 2 decimal places.)
DELUX MODERATE ECONOMY
COST PER BOOK
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.)
DELUX MODERATE ECONOMY
COST PER BOOK
Type of Textbook Activity (Cost) Cost Driver Deluxe Moderate Economy Machine maintenance ($180,000) Number of machine hours 300 900 1,200 Setups ($315,000) Number of setups 30 15 5 Packing ($81,000) Number of cartons 10 30 50 Photo development ($252,000) Number of pictures 4,000 2,000 1,000Explanation / Answer
Answer:a Predetermined overhead rate=Total overhead cost/Total machine hours
=828000/2400 hours=$345/Machine hours
Answer:b
Particulars Deluxe Moderate economy Overhead 103500 310500 414000 Number of books 50000 150000 200000 Overhead cost per book 2.07 2.07 2.07Related Questions
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