Initial concept formation 20
Design 150,000
Construction oversight 100
Number of project changes
Square feet
Number of months
( a ) Compute the predetermined overhead rate for each activity .
( b ) Classify each of these activities as unit-level , batch-level , productlevel , or facility-level .
E4-1
Saddle Inc . has two types of handbags : standard and custom . The controller has decided to use a plant wide 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 $ 50,000 $ 100,000 Machine hours 1,000 1,000 Setup hours 100 400