Adams, Inc., is a book publisher that reissues old titles. The company offers these books with either a standard machine-glued hard cover or a deluxe, handembossed, hand-stitched, leather cover. Adams currently allocates overhead to the books based on direct labor hours.
A recent activity analysis conducted by the controller revealed the following information.

Required
a. Calculate the following for each product:
i. Direct labor hours per unit
ii. Printing press hours per unit
iii. Sales orders per unit
b. What do your calculations above reveal about how standard edition books and deluxe edition books consume activities?
c. If Adams, Inc., implements an activity-based costing system, what will likely happen to the cost of a standard edition book and a deluxe editionbook?

Transcribed Image Text:

Standard Edition Units produced Direct labor hours Printing press hours Sales orders 500,000 80,000 10,000 Deluxe Edition 10,000 30,000 1,600 10,000