Question

Exercise 17-1 (Part Level Submission) 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 $41,000 $103,000 Machine hours 1,240 1,490 Setup hours 109 370 Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $199,000, and $105,000 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, e.g. 12.25.) Predetermined overhead rate % of direct labor cost Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 1 of 3 used (b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 12.25.) Machining $ per machine hour Machine setup $ per setup hour Click if you would like to Show Work for this question: Open Show Work

Answer 1