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Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended an activity-based costing system using the following data: Cost Driver Volume Activity Cost Driver Cost Pencils Pens Setting up Number of setups $ 90,000 22 28 Inspecting Number of parts 27,900 3 6 Packing and shipping Number of boxes shipped 48,000 45,000 75,000 Total overhead $ 165,900 Required: a. Compute the amount of overhead to be allocated to each product under activity-based costing. (Do not round intermediate calculations.)

Answer :

Answer and Explanation:

The computation of the amount of overhead allocated to each product using the activity based costing is presented in the excel spreadsheet. Kindly find it below:

But before that first we have to determine the cost per unit by adding the two units after that the cost per unit is multiplied with the activity cost drivers so that the proper allocation could be made

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