EcoFabrics has budgeted overhead costs of $1,011,150. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 481,500 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). Total estimated machine hours is 214,000, and total estimated number of setups is 1,605. Overhead allocated to the cutting cost pool is $385,200 and $625,950 is allocated to the design cost pool. Additional information related to product usage by these pools is as follows.

		Wool		Cotton
Machine hours		107,000		107,000
Number of setups		1,070		535

Calculate the overhead rate using activity based costing. (Round per machine hour to 2 decimal places, e.g. 12.25.)

Overhead rates for activity-based costing
Cutting		$enter a dollar amount per machine hour rounded to 2 decimal places	per machine hour
Design		$enter a dollar amount per setup	per setup

eTextbook and Media

Determine the amount of overhead assigned to the wool product line and the cotton product line using activity-based costing.

		Wool product line		Cotton product line
Overhead Allocated		$enter a dollar amount		$enter a dollar amount

eTextbook and Media

Calculate the overhead rate using traditional approach. (Round answer to 2 decimal places, e.g. 12.25.)

Overhead rates using the traditional approach

$enter the overhead rate per direct labor hour in dollars rounded to 2 decimal places

per direct labor hour

eTextbook and Media

What amount of overhead would be assigned to the wool and cotton product lines using the traditional approach, assuming direct labor hours were incurred evenly between the wool and cotton?

		Wool product line		Cotton product line
Overhead Allocated		$enter a dollar amount		$enter a dollar amount