construction oversight $ 100,000. The cost drivers and expected use are as follows.
Activities Cost Drivers Expected Use of Cost Drivers per Activity
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