Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 17-3 EcoFabrics has budgeted overhead costs of $973,350. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using

Exercise 17-3

EcoFabrics has budgeted overhead costs of $973,350. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be463,500for 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 $370,800and $602,550is allocated to the design cost pool. Additional information related to these pools is as follows.

Wool

Cotton

Total

Machine hours103,000103,000206,000Number of setups1,0305151,545

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

Overhead rates for activity-based costingCutting$

per machine hourDesign$

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$

$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Karen BraunWendy Tietz

3rd Edition

0132890542, 978-0132890540

More Books

Students also viewed these Accounting questions