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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
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. Activity Cost Pools and Drivers Activity Direct Labor Costs Machine Hours Setup Hours Standard $50,000 1,500 90 Custom $100,000 1,500 420 Total estimated overhead costs are $306,900. Overhead cost allocated to the machining activity cost pool is $210,000, and $96,900 is allocated to the machine setup activity cost pool. Compute the overhead rate using the traditional (plantwide) approach. . Round answer to 2 decimal places, e.g. 12.25. Make sure to calculate the rate in percentage first by multiplying it by 100. Then, round the response in percentage to 2 decimal places. Response - Overhead Rate Predetermined Overhead Rate % of Direct Labor Cost
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