Briones books is concerned about the profitability of its

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Briones Books is concerned about the profitability of its regular dictionaries. Company managers are considering producing only the top-quality, hand-sewn dictionaries with gold-edged pages. Briones is currently assigning the $2,000,000 of overhead costs to both types of dictionaries based on machine hours. Of the overhead, $800,000 is utilities-related and the remainder is primarily related to quality control inspectors' salaries. The following information about the products is also available:

regular hand sewn
number produced 2,000,000 1,400,000
machine hours 170,000 30,000
inspection hours 10,000 50,000
revenues 6,400,000 5,600,000
direct costs 5,000,000 4,400,000

a. Determine the total overhead cost assigned to each type of dictionary using the current allocation system.

Total OH assigned to regular dictionaries $
Total OH assigned to hand-sewn dictionaries $

b. Determine the total overhead cost assigned to each type of dictionary if more appropriate cost drivers were used.

Total OH assigned to regular dictionaries $
Total OH assigned to hand-sewn dictioanaries $

Reference no: EM13596845

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