acct homework

Wilkins 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		$42,700		$106,000
Machine hours		1,290		1,180
Setup hours		100		380

Total estimated overhead costs are $307,600. Overhead cost allocated to the machining activity cost pool is $196,000, and $111,600 is allocated to the machine setup activity cost pool.

Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.)

Predetermined overhead rate

[removed]

% of direct labor cost

Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.)

Machining		$[removed]	per machine hour
Machine setup		$[removed]	per setup hour