Solved by verified expert :Exercise = 17-1
Wilkins Inc. has
two types of handbags: standard and custom. The controller has decided to use a
plant wide 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
$51,800
$102,000
Machine
hours
1,130
1,480
Setup
hours
100
400
Total estimated overhead costs are $295,100. Overhead cost allocated to
the machining activity cost pool is $199,400, and $95,700 is allocated to
the machine setup activity cost pool.
(c) 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<= /td>
Standard
$=
Custom
=
$
