Total estimated overhead costs are 298800 overhead cost

Reference no: EM13585965

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	$51,900	$101,000
Machine hours	1,470	1,280
Setup hours	100	380

Total estimated overhead costs are $298,800. Overhead cost allocated to the machining activity cost pool is $196,700, and $102,100 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		$

Reference no: EM13585965

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