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Exercise 4-1 (Video) Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on
Exercise 4-1 (Video) 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. Direct labor costs Machine hours Setup hours Standard Custom $50,000 $100,000 1,200 1,200 90 390 Total estimated averhead costs are $297,600. Overhead cost allocated to the machining activity cast pool is $192,000, and $105,600 is allocated to the machine setup activity cost paal. 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 cost LINK TO TEXT LINK TO TEXT ILAA . 63) Compute the overhead rates using the activity-based costing approach. Machining Machine setup per machine hour per setup hour LINK TO TEXT LINK TO TEXT VOCO SCHOLAR CYTRCISE Determine the difference in allocation between the two approaches. Traditional costing Standard Custom Activity-based costing Standard Custom Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT
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