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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 Direct labor costs $50,000 $100,000 Machine hours 1,200 1.200 Setup hours 90 420 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. 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 195 % of direct labor cost e Textbook and Media X Your answer is incorrect. Compute the overhead rates using the activity-based costing approach. Machining $ 87750 per machine hour Machine setup $ 220350 per setup hour X Your answer is incorrect. Determine the difference in allocation between the two approaches Traditional.costing Standard 12113 Custom 46 Activity-based costing Standard 5 12113 Custom 1885 e Textbook and Media
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