(ABC) 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 Don't use plagiarized sources. Get Your Custom Essay on determine the total overhead cost assigned to each type of dictionary using the cur 641314 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! | 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 cur rent allocation system.
b. Determine the total overhead cost assigned to each type of dictionary if more appropriate cost drivers were used.
c. Should the company stop producing the regular dictionaries? Explain.
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