Wilkins Inc. has two types of handbags: standard and custom. The controller has

Question

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 se activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations. Standard Custom Direct labor costs Machine hours Setup hours $43,100 1,470 100 $115,000 1,270 370 Total estimated overhead costs are $308,100. Overhead cost allocated to the machining activity cost pool is $198,700, and $109,400 is allocated to the machine setup activity cost pool. (a) Your answer is correct Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.) 12.25%) Predetermined overhead rate cost 194.881 % of direct labor

Explanation / Answer

Particulars Standard Custom Total Direct Labor Costs 43100 115000    1,58,100.00 Machine Hours 1470 1270          2,740.00 Machine Rate = Total Direct Labour Cost / Machine Hours                57.70 Particulars Standard Custom Total Direct Labor Costs 43100 115000    1,58,100.00 Set up hours 100 370             470.00 Machine Rate = Total Direct Labour Cost / Set Up Hours             336.38

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