Project #13105 - Costing

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   $41,800   $104,000
Machine hours   1,370   1,220
Setup hours   100   400


Total estimated overhead costs are $298,200. Overhead cost allocated to the machining activity cost pool is $198,300, and $99,900 is allocated to the machine setup activity cost pool.

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    
Standard  
$
Custom  
$

Subject Business
Due By (Pacific Time) 09/23/2013 01:00 pm
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