Compute the factory-wide overhead rate if overhead is applied on the basis of direct labor hours

Q.2 (10 points) A local leather fabrication factory in Hebron has decided to produce two different types of handbags X and Y. The factory top management is deciding whether to use traditional job- order costing or activity based costing (ABC). Based on 2021 year's budget, two cost pools have been developed with the following information: Leather 50,000 1,000 100 Direct labor hours Sewing machine hours Machine setup hours Overhead Assigned SO $200,000 $100,000 Nylon 100,000 1,000 400 a) Compute the factory-wide overhead rate if overhead is applied on the basis of direct labor hours. SHOT ON MI 8 LITE AI DUAL CAMERA b) Compute the overhead rates using activity based costing. c) Determine the difference in the amount of overhead allocated to each product between the two methods