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Fanning Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor
Fanning Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow. ped Number of rugs Number of direct labor hours Seasonal 1,230 119,000 All-Purpose 2,780 169,000 Totals 4,010 288,000 Required a. Assume that annual overhead costs total $66.240. Select the appropriate cost driver and determine the amount of overhead to allocate to each type of rug b. Fanning automates the seasonal rugline, which results in a dramatic decline in labor usage and allows the company to make 1.230 rugs in only 12,000 hours. Fanning continues to make the all-purpose rugs the same way as before. The number of rugs made and the labor hours required to make them after automation follow Number of rugs Number of direct labor hours Seasonal 1,230 12,000 All-Purpose 2,780 169,000 Totals 4.010 181,000 Overhead costs are expected to increase to $83.260 as a result of the automation Allocate the increased overhead cost to the two types of rugs using direct labor hours as the allocation base Overhead costs are expected to increase to $83,260 as a result of the automation Allocate the increased ove types of rugs using direct labor hours as the allocation base. Sped Complete this question by entering your answers in the tabs below. Required A Required B Assume that annual overhead costs total $66,240. Select the appropriate cost driver and determine the amount of to allocate to each type of rug. (Do not round intermediate calculations.) Type of Product Allocated Cost Seasonal Al purpose The most appropriate cool driver is Required) 29 E E e Type here to search Complete this qustion by entering your answers in the tabs below. Required A Required B Allocate the increased overhead cost to the two types of rugs using direct labor hours as the allocation base. (Do not round intermediate calculations.) Type of Product Allocated Cost Seasonal All purpose
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