a . Compute the overhead rate using the traditional ( plant wide ) approach .
b . Compute the overhead rates using the activity-based costing approach .
c . Determine the difference in allocation between the two approaches .
E4-6
Santana Corporation manufactures snowmobiles in its Blue Mountain , Wisconsin , plant . The following costs are budgeted for the first quarter ' s operations .
Machine setup , indirect materials 4,000 Inspections 16,000 Tests 4,000 Insurance , plant 110,000 Engineering design 140,000 Depreciation , machinery 520,000 Machine setup , indirect labor 20,000 Property taxes 29,000 Oil , heating 19,000 Electricity , plant lighting 21,000 Engineering prototypes 60,000 Depreciation , plant 210,000 Electricity , machinery 36,000 Machine maintenance wages 19,000