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 Wool 116,000 1,160 Cotton 116,000 580 Total 232,000 1,740 Number of setups (a1) (a2) (b1) (62) 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 Overhead Allocated $ $ 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. (al) (a2) (b) (c) Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information. Estimated Use of Cost Drivers per Product Car Truck Number of setups 200 800 Direct labor hours 36,000 33,000 Number of inspections 100 1,100 Car Wheels Truck Wheels Setting up machines Assembling Inspection Total cost assigned