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Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's controller has decided to use a plantwide overhead rate
Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently 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: Family Model Deluxe Model Direct labor costs $73,500 $147,000 Machine hours 2.000 2.000 Setup hours 200 800 Total estimated overhead costs are $441,000, Overhead cost allocated to the machining activity cost pool is $264,600 and $176,400 is allocated to the machine setup activity cost pool. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, eg. 15.25) Overhead rate. $ "Compute the overhead rates using the activity-based costing approach (Round answers to 2 decimal places g 1525 Overhead Rate Machining $ per hour Machine set up $ per hour Determine the difference in allocation between the two approaches Traditional ABC $ Difference Family Model Deluxe Model $
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