Exercise 17-1 (Part Level Submission) Saddle Inc. has two types of handbags: sta

Question

Exercise 17-1 (Part Level Submission) 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 $47,000 $99,000 1,440 430 1,440 103 Total estimated overhead costs are $298,000. Overhead cost allocated to the machining activity cost pool is $197,000, and $101,000 is allocated to the machine setup activity cost pool. Your answer is correct. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25 Predetermined overhead rate 204.10 % of direct labor cost SHOW SOLUTION LINK TO TEXT LINK TO TEXT VIDEO1 SIMILAR EXERCISE Attempts: 3 of 5 used Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 12.25.) per machine hour Machine setup s per setup hour

Explanation / Answer

b Machining 68.40 per machine hour =197000/(1440+1440) Machine setup 189.49 per setup hour =101000/(103+430)

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