Wilkins 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 $53,000 $108,000
Machine hours 1,190 1,500
Setup hours 110 440
Total estimated overhead costs are $308,800.
Overhead cost allocated to the machining activity cost pool is $196,400, and $112,400 is allocated to the machine setup activity cost pool. Collapse question part
Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.) Predetermined overhead rate Entry field with correct answer 191.80 % of direct labor cost SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 1 of 3 used
Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.)
