Q$4-$

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.

$\backslash$table$[[\backslash$table$[[,$Standard,Custom$],[$Direct Labor Costs,$57,850,178,500],[$Machine Hours,$7,850,7,850],[$Setup Hours,$785,400]]]]$

Instructions

$($a$)$ Compute the Overhead Rate using the Traditional $($plantwide$)$ Approach.

$($b$)$ Compute the Overhead Rates using the Activity$-$Based Costing Approach.

$($c$)$ Determine the difference in allocation between the two approaches.

Answer$-$

ACCT$212-$Mod$02-$Ch$02,3$ & $4$ Classwork $02-$ Page $40$ of $60$