Current Attempt in Progress

Vaughn 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 $($machine hours$)$ and machine setup $($number of setups$).$ The total estimated

machine hours is $2,700,$ and the total estimated number of setups is $510.$ Presented below is information related to the company's

operations.

Total estimated overhead costs are $$291,000.$ Overhead cost allocated to the machining activity cost pool is $$189,000,$ and $$102,000$

is allocated to the machine setup activity cost pool.

$($a$)$

Your answer is correct.

The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more

profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client

base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers.

As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more

accurate product costing model can be developed. Here are the three activity cost pools and related information she developed:

Estimated Use of Cost Drivers per Product

Compute the activity$-$based overhead rates for each of the three cost pools: scheduling and travel, setup time, and supervision