A Company has two types of products: Standard and Custom. The company has used a plantwide overhead rate based on direct labour costs. The process people have heard of activity-based costing and want to see how the results would differ if this system were used. Two activity cost pool were developed: machining and machine setup. Presented below is information related to the company's operations. Standard Custom Direct labour costs 30 000 € 110 000 € Machine hours 1000 1000 100 400 Setup hours Total estimated overhead costs are 240 000 €. Overhead cost allocated to the machining activity pool is 140 000 € and 100 000 € allocated to the machine setup activity cost pool. , The tasks: (answers valid only with calculations) a) Compute the overhead rate using traditional (plantwide) approach. (2 p) b) Compute the overehead rates using the activity-based costing approach (2 p) c) Determine the difference in allocation of overheads to the Standard and Custom products between the two approaches (4 p)

pur-new-sol

Related Questions