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

Direct labor costs $ 40,000 $ 110,000

Machine hours 1,450 1,460

Setup hours 103 370

A.Total estimated overhead costs are $ 295,000 . Overhead cost allocated to the machining activity cost pool is $ 196,000 , and $ 99,000is 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.)

Predetermined Overhead Rate____ % of direct labor cost

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 between the two approaches (round answers to 0 decimal places e.g. $1,225.) Traditional costing stand Standard $ Custom $ Activity based costing

Standard$

Custom $

Perdon Corporation manufactures safeslarge mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.

Mobile Safes Walk-in Safes

Units planned for production 190 51

Material moves per product line 290 300

Purchase orders per product line 450 360

Direct labor hours per product line 810 1,690

The total estimated manufacturing overhead was $280,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to:

1)One mobile safe $____per unit

(2)One walk-in safe $____per unit

b.The total estimated manufacturing overhead of $272,400 was comprised of $163,500 for material-handling costs and $108,900 for purchasing activity costs. Under activitybased costing (ABC): (Round intermediate calculations and answers to 2 decimal places, e.g. $12.25.)

(1) What amount of material handling costs are assigned to:

(a) Mobile safe

$

per unit.

(b) Walk-in safe

$

per unit.

(2) What amount of purchasing activity costs are assigned to:

(a) Mobile safe

$

per unit.

(b) Walk-in safe

$

per unit.