CALCULATOR FULL SCREEN PRINTER VERSION LACK NEXT Exercise 17-01 a-c (Video) Sheffield 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. Direct labor costs Machine hours Setup hours Standard $50,000 1,500 90 Custom $100,000 1,200 390 Total estimated overhead costs are $294,600. Overhead cost allocated to the machining activity cost pool is $189,000, and $105,600 is allocated to the machine setup activity cost pool. x Your answer is incorrect. Try again. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate 1.96% of direct labor cost LINK TO TEXT VIDEO: SIMILAR EXERCISE Your answer is correct. Compute the overhead rates using the activity-based costing approach. Machining 70 per machine hour $ Machine setup 220 per setup hour SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO: SIMILAR EXERCISE x Your answer is incorrect. Try again. Determine the difference in allocation between the two approaches. Traditional costing Standard 105000 x Custom 84000 Activity-based costing Standard 19800 Custom 85800