990.000. It has allocated nd cotton) using direct labor ead using osting and ABC. E17-3 American Fabrics has budgeted overhead costs of $990,000. It ha overhead on a plantwide basis to its two products (wool and cotton) using hours which are estimated to be 450,000 for the current year. The company haed experiment with activity-based costing and has created two activity cost pools and ul. activity cost drivers. These two cost pools are: cutting (cost driver is machine how design (cost driver is number of setups). Overhead allocated to the cutting cost mel: $360,000 and $630,000 is allocated to the design cost pool. Additional information related to these pools is as follows. Wool Cotton Total Machine hours 100,000 100,000 200,000 Number of setups 1,000 500 1,500 Instructions (a) Determine the amount of overhead allocated to the wool product line and the co product line using activity-based costing. (b) What amount of overhead would be allocated to the wool and cotton pro using the traditional approach, assuming direct labor hours were incurred tween the wool and cotton? How does this compare with the amount al ABC in part (a)? 100,00 e incurred evenly be the amount allocated using