Question

Exercise 18-1 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 $45,000 $113,000 Machine hours 1,140 1,110 Setup hours 106 430 Total estimated overhead costs are $308,000. Overhead cost allocated to the machining activity cost pool is $195,000, and $113,000 is allocated to the machine setup activity cost pool. 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 194.93 % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEOSIMILAR EXERCISE

Answer 1

Il = Standard Custom $ 45,000 x 194.93% $ 1,13,000 x 194.93 % $ $ 87,719 2,20,271 Il 11 Standard Custom $ $ 87,719 2,20,271

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