Mastery Problem: Activity Based Costing WoolCorp WoolCorp buys sheep's wool from farmers. The company began operations in January of this year and is making decisions on product offerings, pricing and vendors, The company is also examining its method of assigning overhead to products. You've just been hired as a production manager at WoolCorp. Currently WoolCorp makes two products: (1) raw, dean wool to be used as stuffing or insulation and (2) wool yarn for use in the textile industry The company would like you to evaluate its conting methods for its raw wool and wool yarn. Single Plantwide Rate WoolCorp is currently using the single plantwide factory overhead rate method, which uses a predetermined overhead rate based on an estimated allocation base such as direct Isbor hours or machine hours. The rate is computed as follows: Single Plantwide Factory Overhead Rate - (Total nudgeted Vectory overhead) (Total Budgeted Plantwide Allocation Base) WoolCorp has been using combing machine hours as its allocation base The company would like to consider activity based coating In order to understand their current system better, you evaluate Wool or current method of conting for raw wool and wool yam. The production staff has compiled the following information for you on the production of 450 pounds of other raw wool or wool yarn Budgeted Factory Factory Overhead Type Overhead Sorting $25,600 Cleaning 38,400 Combing 1,200 Raw Wool Wool Yarn Hours of combing machine use required 20 In the following table, use combing machine hours as the allocation base for assigning overhead costs to each product. When required, round your answers to the nearest dollar. Single Planbide Factory Overhead Rates per combing hour Raw Wool Wool Yarn Alocated factory overhead cost Activity Bed Costing In order to compare WoodCorp's current mathod with activity based couting, you interview the production staff and compile the following information, which relates to the conts forrow wool and woolyam Type of Cout Activity Base Total Cost Sorting Hours of sorting $25,600 Cleaning Units of cleaning machine power 33.400 Combing Hours of combing machines 1,200 Hours of sorting required Units of cleaning machine power required Hours of combing machine use required Raw Wool Wool Yarn 1.000 4,000 4.200 80 20 1.800 In the following table, compute and enter the activity rate for each of the three activities. If required, round your answers to the nearest cent. Activity Activity Rate Sorting Cleaning per sorting hour per unit of cleaning machine power per hour of combing machinese Combing in the following table, allocate the costs of sorting, cleaning, and combing based on the rates of activity consumed by each product's proces. When required, round your answers to the nearest dollar Raw Wool Wool Yarn Sorting cost Cleaning cost Combing cost Total cost Final Question After reviewing your work on the Single Pantwide Rate and Activity-Based Coating panels, which of the costing method would you recommend to Woolcop, and why