Reference no: EM13596845

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 $