On December 31, Griffin Company had the following adjusted trial balance: Additional Resources Account Titles Debit Credit Cash 18,160 Accounts Receivable 9,540 Prepaid Rent 6,090 Equipment 46,400 Accumulated Depreciation 8,400 Accounts Payable 39,590 Capital Stock 23,300 Retained Earnings 20,100 Dividends 14,700 Sales 68,600 Sales Discounts 1,210 Sales Returns and Allowances 830 Cost of Goods Sold 41,160 Selling Expenses 10,500 General and Administrative Expenses 11,400 159,990 159,990 Required Prepare the second closing entry to close the expense accounts and contra-revenue accounts to Income Summary.

Zachary 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 level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?