Problem 7-20 Claire Company produces Tablets and Books. Total overhead costs

Question: Problem 7-20 Claire Company produces Tablets and B...

Problem 7-20 Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.

Activity Pool	Department Costs Cost Driver
Binding	$247,500	Number of units
Printing	796,250	Machine hours
Product design	195,000	Change orders
General	606,250	None
Total overhead costs	$1,845,000

Other information is as follows:

Tablets	Books
Units	62,500	20,000
Direct materials cost per unit	$3.00	$10.00
Direct labor cost per unit	$4.00	$8.00
Direct labor hours	25,000	16,000
Machine hours	125,000	120,000
Change orders	1,250	2,000

Calculate predetermined OH rate. (Round answer to 2 decimal places, e.g. 15.25.)

Predetermined OH rate

$ /DLH

Determine the unit product cost for Tablets and Books using the traditional costing system. (Round overhead rate and final answers to 2 decmial places, e.g. 15.25.)

Tablets	Books
Unit product cost	$	$

Calculate ABC rates. (Round answers to 2 decimal places, e.g. 15.25.)

ABC rates
Binding	$ /unit
Printing	$ /machine hour
Product design	$ /change order

Determine the unit product cost for Tablets and Books using the activity-based costing system. (Round all rates and final answers to 2 decmial places, e.g. 15.25.)

Tablets	Books
Total unit cost	$	$

Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costing system.(Round answers to 0 decmial places, e.g. 1,525.)

Traditional	ABC	Difference
Total allocated overhead	$	$	$

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