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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 $50,000 $100,000
Machine hours 1,000 1,000
Setup hours 100 400
Total estimated overhead costs are $240,000. Overhead cost allocated to the machining activity cost pool is $140,000, and $100,000 is allocated to the machine setup activity cost pool.

Respuesta :

Answer:

The answer is "160, 70, and 200"

Explanation:

Formula:

[tex]\text{Overhead rate predetermination}=\frac{\text{overhead costs} \times 100}{\text{direct cost of labor}}[/tex]

                                               [tex]=\frac{240000 \times 100}{150000}\\\\=\frac{24 \times 100}{15}\\\\=\frac{2400}{15}\\\\= 160[/tex]

calculating the overhead rate under the ABC:

[tex]Machining = \frac{140000}{2000} = \frac{140}{2}=70 \ / machine\ hour \\\\\text{set up} =\frac{100000}{500} = \frac{1000}{5}= 200 \ / set \ up[/tex]

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