A) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate __% of direct labor.

B) Compute the overhead rates using the activity-based costing approach.

Machining $____ per machine hr

Machine setup $____ per setup hr

C) Determine the difference in allocation between the two approaches.

Traditional costing
Standard		$
Custom		$
Activity-based costing
Standard		$
Custom		$

View Policies Current Attempt in Progress Swifty Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining (machine hours) and machine setup (number of setups). The total estimated machine hours is 2,400 , and the total estimated number of setups is 500. Presented below is information related to the company's operations. Total estimated overhead costs are $297,000. Overhead cost allocated to the machining activity cost pool is $192,000, and $105,000 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach information related to each product's use of cost drivers. (Round answer to 0 decimal places, e.g. 12.) Predetermined overhead rate