Exercise 17-1 Wilkins 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 and machine setup. Presented below is information related to the companys operations.

Exercise 17-1 Wilkins 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 and machine setup. Presented below is information related to the company's operations. Standard Custom Direct labor costs Machine hours Setup hours $55,300 $95,800 1,300 430 1,200 100 Total estimated overhead costs are $306,400. Overhead cost allocated to the machining activity cost pool is $199,700, and $106,700 is allocated to the machine setup activity cost pool Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, eg, 12.25%.) Predetermined overhead rate % of direct labor cost Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places,e.g. $12.25.) Machining Machine setup per machine hour per setup hour