Question

Question 45 6 points Sverre Saddle Inc. has two types of headbags: standaodd custom. The courier has decided to use a wide overhead mate based on direct labor costs. The presideat has heard of activity based costing and wait to see how the results would differ if this systems were used. The 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 $100,000 Machabows 1.000 1.000 Setup hers 100 Total estimated overhead coats are $240,000. Overed cost allocated to the machining activity cost pool is 5140,000, and $100,000 is allocated to the machine setup activity cost pool. Inside (n) Compute the overhead rate using the traditional plantwide) approach (b) Compute the overhead rates using the activity-based cooling approach. () Determine the difference in a location between the two approaches GI For the press ALT.F 10 (PC) ALT.FNF10 ) TTTT Pay Aral DUVET XD09CESETT225 -- OS. O h ommes

Answer 1

A) over head rate= total over head/given base (direct labour cost)

Direct labour cost= 50000+100000=150000

Overhead rate =240000/150000=1.6/labour cost(for 1 doller cost of labour will cost 1.6 overhead)

B) machining rate=over head/total machine hours

Machine rate=