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handbags: standard Saddle Inc. has wo types direct labor costs. The president has heard of activity-based costing and wants to see how the results stom. The ntroler has decidcd to use a plan were used. Two activity cost pools were developed: machining and machine setup. Presented below i company's operations. Standard Custom Direct labor costs $ 50,000 $ 100,000 $ 100,000 Machine hours 1,500 1.200 Setup hours 120 420

handbags: standard Saddle Inc. has wo types direct labor costs. The president has heard of activity-based costing and wants to see how the results stom. The ntroler has decidcd to use a plan were used. Two activity cost pools were developed: machining and machine setup. Presented below i company's operations. Standard Custom Direct labor costs $ 50,000 $ 100,000 $ 100,000 Machine hours 1,500 1.200 Setup hours 120 420

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 S 50,000 $ 100,000 Direct labor costs Machine hours 1,500 1,200 Setup hours 120 420 Total estimated overhead costs are $ 297,000. Overhead cost allocated to the machining activity cost pool is $ 189,000, and $ 108,000 is allocated to the machine setup activity cost pool. X Your answer is incorrect. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 160 % of direct labor cost eTextbook and Media Solution * Your answer is incorrect. Compute the overhead rates using the activity-based costing approach. Machining 2000 per machine hour Machine setup 500 per setup hour eTextbook and Media Solution %24
Transcribed Image Text: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 S 50,000 $ 100,000 Direct labor costs Machine hours 1,500 1,200 Setup hours 120 420 Total estimated overhead costs are $ 297,000. Overhead cost allocated to the machining activity cost pool is $ 189,000, and $ 108,000 is allocated to the machine setup activity cost pool. X Your answer is incorrect. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 160 % of direct labor cost eTextbook and Media Solution * Your answer is incorrect. Compute the overhead rates using the activity-based costing approach. Machining 2000 per machine hour Machine setup 500 per setup hour eTextbook and Media Solution %24
X Your answer is incorrect. Determine the difference in allocation between the two approaches. Traditional costing Standard 80000 Custom 160000 Activity-based costing Standard 90000 Custom 150000 %24 %24 %24
Transcribed Image Text:X Your answer is incorrect. Determine the difference in allocation between the two approaches. Traditional costing Standard 80000 Custom 160000 Activity-based costing Standard 90000 Custom 150000 %24 %24 %24
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