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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 wers used. Two activity cost pools ware 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 1.500 1,200 390 Setup hours 90 Total estimated overhead costs are $299,400. Overhead cost allocated to the machiningactivity cast pool is $199,000, and $110,400 is allocated to the machine setup activity cost pool. (a) Your answer is correct. Compute the overhead rate using the traditional plantwide) approach. (Round answer to 2 decimal places, eg. 1225) Predetermined overhead rats 199.6 5 of direct labor cost Attempts: 1 of 7 used (b) Compute the overhead rates using the activity-based costing approach. Machining S per machine hour Machine setup S per setup hour Save for Later Attempts: 0 of 7 used Submit
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