Jordan Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow Activities Unit LevelBatch Level Product LevelFacility LevelCost$ 55,000 $ 22, 550 $ 14,0005 280, 000 Cost driver2, 500labor hours41setupsPercentage of use 14, 000units Production of 790 sets of cutting shears, one of the companys 20 products, took 200 labor hours and 7 setups and consumed 19 percent of the product- sustaining activities Required Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears?How much overhead is allocated to the cutting shears using activity-based costing?Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 790 units are produced. If direct product costs are $100 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system?
Jordan Company produces commercial gardening equipment. Since production is highly automated, the company allocates its
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