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Cullumber inc makes two types of handbags: standard and custom. The...

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Accounting

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Cullumber inc makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour 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 (machine hours) and machine set-up (number of set-ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500 . Presented below is information related to the company's operations. Total estimated overhead costs are $277,500. The overhead cost allocated to the machining activity cost pool is $169,500, and $108,000 is allocated to the machine set-up activity cost pool. (a) Calculate the overhead rate using the traditional (plant-wide) approach. Predetermined overhead rate % of direct labour cost

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