Saddle Inc Has Two Types Of Handbags Standard And Custom The Controller Has Decided To Use A Plantwide Overhead Rate 1 (25.01 KiB) Viewed 13 times
Saddle Inc Has Two Types Of Handbags Standard And Custom The Controller Has Decided To Use A Plantwide Overhead Rate 2 (30.42 KiB) Viewed 13 times
Saddle Inc Has Two Types Of Handbags Standard And Custom The Controller Has Decided To Use A Plantwide Overhead Rate 3 (24.79 KiB) Viewed 13 times
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. 120 390 Total estimated overhead costs are $304,200. Overhead cost allocated to the machining activity cost pool is $192,000, and $112.200 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. 12.25) Predetermined overhead rate. % of direct labor cost eTextbook and Media x Your answer is incorrect. Compute the overhead rates using the activity-based costing approach. Machining $ 71.53 per machine hour Machine setup 21271 per setup hour
Determine the difference in allocation between the two approaches. Traditional costing 4 Standard $ Custom Activity-based costing Standard Custom LA tA +A
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!