0.5/1 E EcoFabrics has budgeted overhead costs of $1,124,550. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 535,500 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting (cost driver is machine hours) and design (cost driver is number of setups). Overhead allocated to the cutting cost pool is $428,400 and $696,150 is allocated to the design cost pool. Additional information related to these pools is as follows. Machine hours Wool 119,000 Cotton Total 119,000. Number of setups 1,190 595 238,000 1,785 (a1) Your answer is correct. Calculate the overhead rate using activity based costing. (Round answers to 2 decimal places, eg. 12.25.) Overhead rates for activity-based costing Cutting Design $ 1.8 per machine hour 390 per setup