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I need help with part C please Waterway Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide
I need help with part C please
Waterway 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 (machine hours) and machine setup (number of setups). The total estimated machine hours is 2.400, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard $50,000 Custom $ 100,000 Direct labor costs Machine hours Number of setups 1,200 1.200 90 410 Total estimated overhead costs are $ 294,000. Overhead cost allocated to the machining activity cost pool is $ 192,000, and $ 102,000 is allocated to the machine setup activity cost pool. Your answer is correct. Compute the overhead rate using the traditional (plantwide) approach information related to each product's use of cost drivers. (Round answer to decimal places, eg. 12.) Predetermined overhead rate 196 % of direct labor cost (b) Your answer is correct Compute the overhead rates using the activity-based costing approach. Machining 80 per machine hour Machine setup $ 204 per setup hour (c) Determine the difference in allocation between the two approaches. Traditional costing Standard $ Custom $ Activity-based costing Standard $ Custom $ Step by Step Solution
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