A B C D E F G H 1 E4-1 Assign overhead using traditional costing and ABC | 2 Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide 3 overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how 4 the results would differ If this system was used. Two activity cost pools were developed: machining and machine 5 setup. Presented below is Information related to the company's operations Direct labor costs Machine hours Setup hours Standard Custom $50,000 $100,000 1,000 1,000 100 400 10 12 Total estimated overhead costs are $240,000. Overhead cost allocated to the machining activity cost pool is 13 $140,000 and $100,000 is allocated to the machine setup activity cost pool. 15 Instructions 16 (6) Compute the overhead rate using the traditional (plontwido) approach 17 (0) Compute the overhead rates using the activity based costing approach 18 (6) Determine the difference in allocation between the two approaches, 19 20 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Predetermined overhead rato 23 (a) Estimated overhead Direct labor costs Value - Value of direct labor cost Value 30 (b) Activity cost pools Machining Machine setup Cost drivers Machino hours Setup hours Estimated overhead $140,000 100,000 14. 1 Activity based overhead ratos 9 PAPARACOW VIP Home Insert Page Layout Data Review Formulas G b) C D E F Activity cost pools Cost drivers Machining Machine hours Machine setup Setup hours Activity-based overhead rates H I Estimated overhead $140,000 100.000 Machining Value Value |||. per machine hour Machine setup: Value Value CL2|per setup hour m T 5 (c) Traditional costing: Standard Custom $50,000 X POH rate $100,000 X POH rate olga Total OH allocation Activity-based costing Standard Custom Machining: 1.000 MH X OH rate 1,000 MHX OH rate SS8963 Machine setup: 100 Setup Hr x OH rate 400 Setup Hr X OH rato Total OH allocation L ILI? 11 ? E4- 1449 P4-1A | P2C Type here to search ExcelTemplateAssignment_Ch04 (5) - Excel Search Formulas Data Review View HelpDYMO Label Quic Save OHP Home Insert Page Layout Xv fx BCD ) Traditional costing: Standard Custom $50.000 X POH rate $100,000 x POH rate Total OH allocation Activity-based costing Standard Custom Machining: 1,000 MHX OH rate 1,000 MHX OH rate Machine setup: 100 Setup Hr x OH rate 400 Setup Hrx OH rate Total OH allocation After you have completed E4-1, consider the additional question. Assume that total estimated overhead costs are $285,000. Overhead cost allocated to the machining activity cost pool is$150,000 and $135,000 is allocated to the machine setup activity cost pool. Redo instructions (a) to (c). 54-1E44E4-9 P4-1A | P4:2A CD4 1 Type here to search
