Question

Question 6 of 12 < 0/1 ili Current Attempt in Progress 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. Direct labor costs Machine hours Setup hours Standard $40,000 1,100 95 Custom $95,000 1,100 370 Total estimated overhead costs are $295,000. Overhead cost allocated to the machining activity cost pool is $195,000, and $100,000 is allocated to the machine setup activity cost pool, (a) X Your answer is incorrect. 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

Answer 1

Requirement (a) Estimated overhead Cost Direct Labour Costs (40000+95000) $ $ 295,000 135,000 Predetermined Overhead Rate 218.52% of Direct Labour Costs Note : Do comment for any further assistance