ACC560 Week 3 Homework Chapter 4 Activity-Based Costing E4-1 Saddle Inc. has two types of handbags: standard and custore. The controller has decided to use a plantwide overhcad rate hased on direct labor costs. The president has heard of activity based costing and wants to see how the results would differ if this sytem were used. Two activity cost pools were developed: machining and machine setup. Pre- sented helow is information rclated to the company's operations Standard $50,000 100 Custom Direct labor costs Machine hours Sctup hours 1,000 100,000 1,000 Total estimated overhead costs are $240,000. Overhead cost allocated to the machining activity cost pool is $140,000, and $100,000 is allocated to the machine setup actihity cost pool. Instructions (a) Compute the overhead rate using the traditional (plantwide) approach. (b) Compute the overhead rates using the activity-hased costing approach. (c) Determine the difference in allocation between the two approaches E4-6 Santana Corporation manufactures snowmobiles in its Blue Mountain, Wiscensin. plant. The following costs arc budgesed for the first quarter's operations Machine setup, indirect matcrials Inspections Tests Insurance, plant 4,000 6,000 4,000 110,000 140,000 520,000 20,000 29,000 19,000 21,000 60,000 210,000 36,000 19,000 Engincering design Depreciation, machinery Machine setup, indirect labor Property taxes heating ant lighting Electricity, plant lighting Engineering prototypes Depreciation, plant Electricity, machinery Machine maintenance wages Instructions Classify the above costs of Santana Corporation into activity cost pools using the follow- ing: engineering, machinery, machine setup, quality control, factory utilitics, mainte- nance. Next, identify a cost driver that may be used to assign cach cost pool to cach line of