Compute the overhead rates using the activity-based costing approach. Machining $ per machine hour Machine setup $ per setup hour ?- enter a dollar amount per machine hour ?-enter a dollar amount per setup hour Determine the difference in allocation between the two approaches. Traditional costing Standard $enter a dollar amount Custom $enter a dollar amount Activity-based costing Standard $enter a dollar amount Custom $enter a dollar amount
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide
|
Standard
|
Custom
|
|||
|---|---|---|---|---|
| Direct labor costs | $50,000 | $100,000 | ||
| Machine hours | 1,200 | 1,200 | ||
| Setup hours | 90 | 420 |
Total estimated overhead costs are $299,100. Overhead cost allocated to the machining activity cost pool is $192,000, and $107,100 is allocated to the machine setup activity cost pool.
Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.)
Compute the overhead rates using the activity-based costing approach.
| Machining |
$
|
per machine hour | |
|---|---|---|---|
| Machine setup |
$
|
per setup hour |
?- enter a dollar amount per machine hour
?-enter a dollar amount per setup hour
Determine the difference in allocation between the two approaches.
| Traditional costing | ||
|---|---|---|
| Standard |
$enter a dollar amount
|
|
| Custom |
$enter a dollar amount
|
|
| Activity-based costing |
|
|
| Standard |
$enter a dollar amount
|
|
| Custom |
$enter a dollar amount
|
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
