Question

based on my previous answers, please calculate the difference in allocation of traditional and activity based costing

SOM BACK NEX CALCULATOR STANDARD PRINTER Exercise 17-1 Saddle Inc. has two types of handbags standard and custom. The controller has decided to use a plante overhead rabe based on direct labor costs. The president has heard of activity based on and would differ this system were used. Two activity cost pools were developed machining and machine stue Presented below is information related to the company's operations Standard Custom Direct labor costs 342,000 $100,000 Machine hours 1 .270 Setup hours 400 to see how the Total estimated overhead costs are $300,000 Overhead cost allocated to the machining activity cost pool is $200,000, and $100,000 is located to the machine stup activity cost pool Your answer is correct. Compute the overhead rate using the traditional (plantwide) aproach. (Round answer Predetermined overhead route 200.79 of direct laber cost LINK TO TEXT LINE TO TEXT Your answer is correct. Compute the overhead rates using the activity based costing approach (Aound answers 1 Machining Machine setup 80.92 per machine hour 201.61 per setup hour

Answer 1

Solution:

Traditional costing:

Standard = $42000*209.79% = $88,112

Custom = $101000*209.79% = $211,888

Activity based costing:

Standard = $80.97*1200 + $201.61*96 = $116,519

Custom = $80.97*1270 + $201.61*400 = $183,476