[Get Answer ]-The Following Cost Information Is Avalable For Senkowski Ltd

Question Description

Senkowski Ltd. cost information: Activity-Purchasing, AllocationBase -Purchase orders, Volume of Activity 30,000, Overhead costs $150,000.Activity-Receiving, Allocation base Shipments received, Volume of Activity15,000, Overhead Cost 60,000. Activity-Machine setups, Allocation Base-Setups,Volume of Activity 2,500, Overhead costs 200,000. Activity- Quality control,Allocation base Inspections, Volume of Activity 18,000, Overhead costs 90,000.Direct materials are $15 per unit for luxury handbags and $11 per unit fordeluxe handbags. There were 12, 500 direct labor hours, each of which wascharged to inventory at $18 per hour. A. Management is trying to decide betweenusing the traditional allocation method based on direct labor hours and usingactivity-based costing. Calculate the overhead rates for each method. B. Oneparticular batch of 40 luxury handbags had the following specifications: directlabor hours 8, purchase orders 4, shipments received 3, setups 2, inspections12. Calculate the overhead to be allocated to the bags under the traditionaland activity-based costing techniques. C.Which costing method do you think is betterfor the company? Why?