Elle Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour 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 and machine set-up. Presented below is information related to the company's operations.

Question 31 Elle Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour 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 and machine set-up. Presented below is information related to the company's operations. Direct labour costs $50,000 $100,000 Machine hours 500 1,000 Set-up hours 100 400 Total estimated overhead costs are $330,000. The overhead cost allocated to the machining activity cost pool is $181,500, and $148,500 is allocated to the machine set-up activity cost pool. V (a) El Your answer is incorrect. Try again. Calculate the overhead rate using the traditional (plant-wide) approach