0 BJ E c r I v E >E| Exercise 7-55 PLANTWIDE RATE AND ACTIVITY-BASED COSTING Oilrsos Textile Inc. manufactures two products: sweatshirts and t-shirts. The manufactur- ing process involves two activities: cutting and sewing. Expected overhead costs and cost drivers are as follows: Cutting Sawing Overhead costs $160,000 $350,000 Machine hours 800,000 50,000 Direct labour hours 40,000 20,000 Required: 1. Calculate the activity-based overhead rates. Use machine hours for the cutting activ- ity and direct labour hours for the sewing activity. Round to two decimal points. 2. Calculate a plantwide overhead rate using direct labour hours as the cost driver. 3. Assume the activities for sweatshirts are as follows: Cutting Sewing Machine hours 4 2 Direct labour hours 2 4 Calculate the overhead costs allocated to sweatshirts based on the activity-based overhead rates calculated in Requirement 1. 4. Using the assumptions given in Requinnent 3, calculate the overhead costs allocated to sweatshirts using the plantwide overhead rate in Requirement 2