Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 18-1 Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct
Exercise 18-1 Saddle 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 $59,000 $112,000 Machine hours 1,380 1,110 Setup hours 101 370 Total estimated overhead costs are $309,000. Overhead cost allocated to the machining activity cost pool is $200,000, and $109,000 is allocated to the machine setup activity cost pool, Compute the overhead rate using the traditional (plantwide) approach. (Round answer 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 answer decimal places, e.g. Machining per machine hour per setup hour Machine setup Determine the difference in allocation between the two approaches. (Round answers to o decimal places, e.. 1.225 nment FULL SCREEN PRINTER VERSION Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 180.70% 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 per machine hour per setup hour Machine setup Determine the difference in allocation between the two approaches. (Round answers to o decimal places, e.g. 1,225.) Traditional costing Standard Custom Activity-based costing Standard Custom
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started