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 |
|
$40,100 |
|
$108,000 |
| Machine hours |
|
1,210 |
|
1,310 |
| Setup hours |
|
110 |
|
390 |
Total estimated overhead costs are $299,700. Overhead cost allocated to the machining activity cost pool is $196,700, and $103,000is allocated to the machine setup activity cost pool.
(a) Compute the overhead rate using the traditional approach.
Predetermined overhead rate_______________% of direct labor cost
(b) The parts of this question must be completed in order. This part will be available when you complete the part above.
(c) The parts of this question must be completed in order. This part will be available when you complete the part above