Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide 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		$42,700		$106,000
Machine hours		1,290		1,180
Setup hours		100		380

Total estimated overhead costs are $307,600. Overhead cost allocated to the machining activity cost pool is $196,000, and $111,600 is allocated to the machine setup activity cost pool.