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linda_us
linda_us, Master's Degree
Category: Single Problem
Satisfied Customers: 787
Experience:  A tutor for Business, Finance, Accounts and other related topics.
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Addle Inc. has two types of handbags: standard and custom.

Customer Question

addle 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 $108,000
Machine hours 1,270 1,370
Setup hours 98 420Total estimated overhead costs are $309,000. Overhead cost allocated to the machining activity cost pool is $196,000, and $113,000 is allocated to the machine setup activity cost pool.
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Customer: Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.)
Submitted: 7 months ago.
Category: Single Problem
Customer: replied 7 months ago.
Determine the difference in allocation between the two approaches. (Round answers to 0 decimal places, e.g. 1,225.)Traditional costing
Standard $
Custom $
Activity-based costing
Standard $
Custom $
Expert:  F. Naz replied 7 months ago.

Please accept the offer so the answer may be provided in next 12 to 18 hours, thanks.

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