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Crane has budgeted overhead costs of $912,600. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor
Crane has budgeted overhead costs of $912,600. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours, which are estimated to be 365,040 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 $259,200 and 5653.400 is allocated to the design cost pool. Additional information related to these pools is as follows. (a) Determine the amount of overhead assigned to the wool product line and the cotton product line using activity-based costing. (Round rote per unit to 2 decimal ploces, es 1.25 and final answers to 0 decimal places, eg. 5,125 ) What amount of overhead would be assigned to the wool and cotton product lines using the traditional approach, assuming direct Iabor hours were incurred evenly between the wool and cotton? How does this compare with the amount assigned using ABC in part abeve? (Round rate per direct lober hour to 2 decimal ploces, es. 1.25 and final onswers to 0 decimal ploces, es 5.125. Enter negative answers wing either a nezotive sign preceding the number e 8.2,945 or parentheses es. 12,945)4
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