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Wilkins Inc. has two types of handbags: standard and custom

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Question;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.StandardCustomDirect labor costs$52,400$116,000Machine hours1,4101,210Setup hours98380Total;estimated overhead costs are $301,800. Overhead cost allocated to the;machining activity cost pool is $195,400, and $106,400 is allocated to;the machine setup activity cost pool.Instructions(a) Compute the overhead rate using the traditional (plantwide) approach.(b) Compute the overhead rates using the activity-based costing approach.(c) Determine the difference in allocation between the two approaches.

 

Paper#42987 | Written in 18-Jul-2015

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