Exercise 17-3 EcoFabrics has budgeted overhead costs of $954,450. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 454,500 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 $363,600 and $590,850 is allocated to the design cost pool. Additional information related to these pools is as follows. Cotton Machine hours Number of setups Wool 101,000 1,010 101,000 505 Total 202,000 1,515 Calculate the overhead rate using activity based costing. (Round answers to 2 decimal places, e.g. 12.25.) Overhead rates for activity-based costing Cutting per machine hour Design per setup LINK TO TEXT LINK TO TEXT Determine the amount of overhead allocated to the wool product line and the cotton product line using activity-based costing. Wool product line Cotton product line Overhead Allocated LINK TO TEXT LINK TO TEXT Calculate the overhead rate using traditional approach. (Round answer to 2 decimal places, e.g. 12.25.) Overhead rates using the traditional approach per direct labor hour LINK TO TEXT LINK TO TEXT What amount of overhead would be allocated 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 at Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank sales. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each produ line. The information shown below relates to overhead. Mobile Safes Walk-in Safes 190 Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line 290 440 800 210 340 1.710 The total estimated manufacturing overhead was $274,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.) per unit (1) One mobile sales (2) One walk-in safe per unit LINK TO TEXT The total estimated manufacturing overhead of $274,000 was comprised of $173,000 for materials handling costs and $101,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.) What amount of materials handling costs are assigned to: (a) One mobile sale per unit (b) One walk-in sale per unit LINK TO TEXT The total estimated manufacturing overhead of $274,000 was comprised of $173,000 for materials handling costs and $101,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.) What amount of purchasing activity costs are assigned to: (a) One mobile sale per unit (b) One walk-in safe per unit LINK TO TEXT Compare the amount of overhead allocated to one mobile sale and to one walk-in sale under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.) Traditional Costing Activity-Based Costing Mobile sale