Exercise 4-1 (Part Level Submission) Wilkins Inc. has two types of handbags: standard and custom

Feb 3rd, 2012
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Exercise 4-1 (Part Level Submission) 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 $40,800 $111,000 Machine hours 1,230 1,340 Setup hours 100 380 Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $197,700, and $106,300 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.) Predetermined overhead rate % of direct labor cost (b) Compute the overhead rates us ......................

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Exercise 4-1 (Part Level Submission)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$40,800$111,000Machine hours1,2301,340Setup hours100380Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $197,700, and $106,300is allocated to the machine setup activity cost pool.(a)Compute the overhead rate using the traditional (plantwide) approach.(Round answers to 2 decimal places, e.g. 12.25%.)Predetermined overhead rate% of direct labor cost(b)Compute the overhead rates using the activity-based costing approach.(Round answers to 2 decimal places, e.g. $12.25.)Machining$per machine hourMachine setup$per setup hour(c)Determine the difference in allocation between the two approaches.(Round answers to 0 decimal places, e.g. $1,225.)Traditional costingStandard$Custom$Activity-based costingStandard$Custom$Exercise 4-2 (Part Level Submission)Ayala Inc. has conducted the following analysis related to its product lines,

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