Exercise 18-3 American Fabrics has budgeted overhead costs of $1,239,480. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 563,400 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 $450,720 and $788,760 is allocated to the design cost pool. Additional information related to these pools is as follows. Wool Cotton Total 125,200 125,200 250,400 1,878 Machine hours Number of setups 1,252 626 Calculate the overhead rates for activity-based costing using the traditional approach. (Round answers to 2 decimal places, e.g. $12.25.) Overhead rates for activity-based costing Cutting Design per machine hour per setup Overhead rates using the traditional approach per direct labor hour