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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;$53,200;$119,000;Machine hours;1,410;1,180;Setup hours;110;410;Total estimated overhead costs are $298,800. Overhead cost allocated to the machining activity cost pool is $199,800, and $99,000 is allocated to the machine setup activity cost pool.;Instructions;(a) Compute the overhead rate using the traditional (plant wide) approach.;b) Compute the overhead rates using the activity-based costing approach.;(c) Determine the difference in allocation between the two approaches


Paper#76768 | Written in 18-Jul-2015

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