Question

Identify a cost driver that may be used to assign each cost pool to each line of snowmobiles. Cost Driver Budgeted Costs Mach
Exercise 4-1 (Video) Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwid
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Answer #1
Total Estimated Overhead               3,04,200
Total Direct Labor Costs               1,50,000 (50000+100000)
Predetermined Overhead Rate 202.800% of Direct Labor Cost
Activity Pools Overhead Cost Activity Factor
Standard Custom Total Activity Rate
Machining 192000 1200 1200 2400 80.00 Per Machine Hour
Machine Setups 112200 120 390 510 220.00 Per Setup Hour
Allocations:
Traditional Costing Direct Labor Overhead
Standard                  50,000        1,01,400 (DL Cost *202.8%)
Custom               1,00,000        2,02,800 (DL Cost *202.8%)
Activity Factor
ABC: Standard Custom
Standard                  96,000            96,000 (Activity Rate*Actiivty factors)
Custom                  26,400            85,800

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