Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce...

Transcribed Image Text:

Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Activity (Cost) Machine maintenance ($360,000) Setups ($630,000) Packing ($162,000) Photo development ($504,000) Cost Driver Deluxe Type of Textbook Moderate Economy Number of machine hours 300 900 1,200 Number of setups 30 15 5 Number of cartons Number of pictures 10 30 50 4,000 2,000 1,000 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 50,000 Moderate 150,000 Economy 200,000 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. Note: For all requirements, round your answers to 2 decimal places. a. Cost per book (volume-based allocation) b. Cost per book (activity-based costing) Deluxe Moderate Economy Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Activity (Cost) Machine maintenance ($360,000) Setups ($630,000) Packing ($162,000) Photo development ($504,000) Cost Driver Deluxe Type of Textbook Moderate Economy Number of machine hours 300 900 1,200 Number of setups 30 15 5 Number of cartons Number of pictures 10 30 50 4,000 2,000 1,000 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 50,000 Moderate 150,000 Economy 200,000 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. Note: For all requirements, round your answers to 2 decimal places. a. Cost per book (volume-based allocation) b. Cost per book (activity-based costing) Deluxe Moderate Economy