Exercise 4-1 Saddle Inc. has two types of handbags: standard and custom. The con

Question

Exercise 4-1 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 Machine hours Setup hours Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $195,000, and $109,000 is allocated to the machine setup activity cost pool $51,000 1,410 96 116,000 1,330 400 Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25) Predetermined overhead rate % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE

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Predetermined Overhead Rate (Traditional) Total Overhead/Direct Labor Cost*100 304000/(51000+116000)*100                                             182.04 182% of Direct Labor Cost

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