Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce...
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Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Type of Textbook Moderate Economy 1,280 Activity (Cost) Machine maintenance ($320,000) Setups ($650,000) Packing ($170, 000) Photo development ($780,000) Cost Driver Deluxe Number of machine hours Number of setups Number of cartons Number of pictures 320 960 35 10 25 40 60 5,000 3,000 2,000 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. Required a. Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year: Deluxe Moderate Economy 200,000 50,000 150,000 Determine the overhead cost per book for each book type. b. 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. (For all requirements, round your answers to 2 decimal places.) Deluxe Moderate Economy a. Cost per book (volume-based allocation) b. Cost per book (activity-based costing) Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Type of Textbook Moderate Economy 1,280 Activity (Cost) Machine maintenance ($320,000) Setups ($650,000) Packing ($170, 000) Photo development ($780,000) Cost Driver Deluxe Number of machine hours Number of setups Number of cartons Number of pictures 320 960 35 10 25 40 60 5,000 3,000 2,000 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. Required a. Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year: Deluxe Moderate Economy 200,000 50,000 150,000 Determine the overhead cost per book for each book type. b. 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. (For all requirements, round your answers to 2 decimal places.) Deluxe Moderate Economy a. Cost per book (volume-based allocation) b. Cost per book (activity-based costing)
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Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor-Yi Tsay, Philip Olds
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