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) Cost Driver Number of machine hours Number of setups Number of cartons Photo development ($504,000) Number of pictures 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. Type of Textbook Deluxe Setups ($630,000) Packing ($162,000) 300 30 10 4,000 Moderate Economy 900 1,200 15 30 2,000 5 50 1,000 Required Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year: Deluxe Moderate Economy 50,000 150,000 200,000 Determine the overhead cost per book for each book type. 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.
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) Cost Driver Number of machine hours Number of setups Number of cartons Photo development ($504,000) Number of pictures 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. Type of Textbook Deluxe Setups ($630,000) Packing ($162,000) 300 30 10 4,000 Moderate Economy 900 1,200 15 30 2,000 5 50 1,000 Required Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year: Deluxe Moderate Economy 50,000 150,000 200,000 Determine the overhead cost per book for each book type. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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)
Cost Driver
Number of machine hours
Number of setups
Number of cartons.
Photo development ($504,000)
Number of pictures
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.
Type of Textbook
Deluxe
Setups ($630,000)
Packing ($162,000)
300
30
10
4,000
Moderate Economy
900
1,200
15
5
50
30
2,000
Required
Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of
books during the prior year:
Deluxe Moderate Economy
50,000 150,000 200,000
Determine the overhead cost per book for each book type.
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.
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