Sandhill Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour 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 (machine hours) and machine set-up (number of set-ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard Custom Direct labour costs $50,000 $100,000 Machine hours 500 1,000 Set-up hours 100 400 Total estimated overhead costs are $330,000. The overhead cost allocated to the machining activity cost pool is $181,500, and $148,500 is allocated to the machine set-up activity cost pool. (a) Your answer is correct. Calculate the overhead rate using the traditional (plant-wide) approach. Predetermined overhead rate 220 % of direct labour cost Attempts: 1 of 2 used (b) Calculate the overhead rate using the activity-based costing approach. Cost Pool Overhead Rate Machining $ per machine hour Machine set-up $ per set-up hour Save for Later Attempts: 0 of 2 used Submit Answer Sandhill Inc, makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour 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 (machine hours) and machine set-up (number of set-ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard Custom Direct labour costs $50,000 $100,000 Machine hours 500 1,000 Set-up hours 100 400 Total estimated overhead costs are $330,000. The overhead cost allocated to the machining activity cost pool is $181,500, and $148,500 is allocated to the machine set-up activity cost pool. (a) Calculate the overhead rate using the traditional (plant-wide) approach. Predetermined overhead rate % of direct labour cost Save for Later Attempts: 0 of 2 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above