Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis manufacturing plant. The...

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Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The costs and cost drivers associated with four activity cost pools are given below. Activities: Cost Cost Driver Unit Level $106,000 5,300 labor hours Batch Level $71,300 230 setups Product Level $38,100 x of use Facility Level $102,600 $1,300 units Production of 1,000 units of a small tractor tire required 330 labor hours and four setups and consumed 10% of the product sustaining activities. Required: a. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much total overhead would have been allocated to the tractor tire? b. How much total overhead cost will be allocated to the tire under activity-based costing? c. What price will be quoted if the product is priced at 20% above cost? Compute the price per unit under both the direct labor hours approach and under activity-based costing. The direct manufacturing costs consist of direct material of $20 and direct labor of $30 Note: Do not round your intermediate calculations. Round your answers to 2 decimal places. Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The costs and cost drivers associated with four activity cost pools are given below. Activities: Cost Cost Driver Unit Level $106,000 5,300 labor hours Batch Level $71,300 230 setups Product Level $38,100 x of use Facility Level $102,600 $1,300 units Production of 1,000 units of a small tractor tire required 330 labor hours and four setups and consumed 10% of the product sustaining activities. Required: a. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much total overhead would have been allocated to the tractor tire? b. How much total overhead cost will be allocated to the tire under activity-based costing? c. What price will be quoted if the product is priced at 20% above cost? Compute the price per unit under both the direct labor hours approach and under activity-based costing. The direct manufacturing costs consist of direct material of $20 and direct labor of $30 Note: Do not round your intermediate calculations. Round your answers to 2 decimal places.

Answer rating: 100% (QA)

a If labor hours were used as the companywide allocation base the total overhead allocated to the tr... View the full answer