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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.
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 $50,000 $100,000 Direct labor costs 1.500 1.200 Machine hours Setup hours 90 390 Total estimated overhead costs are $299,400. Overhead cost allocated to the machining activity cost pool is $189.000. and $110.400 is allocated to the machine setup activity cost pool. X Your answer is incorrect. Compute the overhead rate using the traditional plantwide) approach. (Round answer to 2 decimal places, eg. 12.25.) Predetermined overhead rate 2.05% of direct labor cost e Textbook and Media X Your answer is incorrect. Compute the overhead rates using the activity-based casting approach Machining $ 21D.DOO per machine hour Machine setup $ 96.900 per setup hour e Textbook and Media X Your answer is incorrect. Determine the difference in allocation between the two approaches. Traditional costing Standard $ 172,100.00 Custom $ 172,100.00 Activity-based costing Standard $ 172,100.00 Custom $ 172,100.00 e Textbook and Media
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