***I have attached an example...this may be helpful. It has answers. Please note my question below has several parts.

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	$56,200	$105,000
Machine hours	1,500	1,440
Setup hours	110	400

Total estimated overhead costs are $307,300. Overhead cost allocated to the machining activity cost pool is $195,500, and $111,800 is allocated to the machine setup activity cost pool.

• Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.)

Predetermined overhead rate

% of direct labor cost

Warning

(b)

Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.)

Machining	$	per machine hour
Machine setup	$	per setup hour

(c)

Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. $1,225.)

Traditional costing
Standard	$
Custom	$
Activity-based costing
Standard	$
Custom	$

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 Direct labor costs Machine hours Setup hours Custom $56,600 1,230 100 $114,000 1,470 380 Total estimated overhead costs are $308,300. Overhead cost allocated to the machining activity cost pool is $198,500, and $109,800 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.) Predetermined overhead rate % of direct labor cost 180.72 (b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.) $ Machining 73.52 Machine setup 228.75 $ per machine hour per setup hour (c) Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. $1,225.) Traditional costing $ Standard 102,288 Custom 206,021 $ Activity-based costing $ Standard 113,305 Custom 194,999 $