Question 11 EcoFabrics has budgeted overhead costs of $1,096,200. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 522,000 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 $417,600 and $678,600 is allocated to the design cost pool. Additional information related to these pools is as follows. Machine hours Number of setups Wool 116,000 1,160 Cotton 116,000 580 Total 232,000 1,740 (a1) (a2) (61) 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 $ Click if you would like to Show Work for this question: Open Show Work Question 12 Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Car 36,000 Truck 11,000 Estimated wheels produced Direct labor hours per wheel Total estimated overhead costs for the two product lines are $731,400. (a1) (az) (b) Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Setting up machines Assembling Inspection Estimated Use of Cost Drivers 1,000 setups 69,000 labor hours 1,200 inspections Estimated Overhead Costs $207,000 276,000 248,400 Compute the activity-based overhead rates for these three cost pools. Overhead Rates Setting up machines Assembling Inspection