Allocating costs with different cost drivers Talton Shoes Corporation produces three brands of shoes, Brisk, Pro, and Runner. Relevant information about Talton overhead activities, their respective costs, and their cost drivers follows.

Required
a. Talton currently allocates all overhead costs based on labor hours. The company produced the following numbers of pairs of shoes during the prior year.

Determine the overhead cost per pair of shoes for each brand.
b. Determine the overhead cost per pair of shoes for each brand, assuming that the volume based allocation system described in Requirement a is replaced with an activity-based costing system.
c. Explain why the per pair overhead costs determined in Requirements a and b differ.

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Cost Driver Overhead Costs Brisk Pro Runner Fringe benefits (S360,000) Setups ($200,000) Packing costs ($40,000) Quality control ($300,000) Labor hours Number of setups Number of cartons Number of tests 20,000 25 300 200 20,000 10 300 80 10,000 15 200 120