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, clean 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 costing methods for its raw wool and wool yarn.

Question Content Area

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 labor hours or machine hours. The rate is computed as follows:

Single Plantwide Factory Overhead Rate $=($Total Budgeted Factory 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 costing. In order to understand their current system better, you evaluate WoolCorp$$s current method of costing for raw wool and wool yarn. The production staff has compiled the following information for you on the production of $550$ pounds of either raw wool or wool yarn:

Factory

Overhead Type Budgeted

Factory

Overhead

Sorting $$25,600$

Cleaning $38,400$

Combing $1,300$

Raw Wool Wool Yarn

Hours of combing machine use required $8020$

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 Plantwide Factory Overhead Rate: $fill in the blank $569$bfaf$8$ef$9207$e$\_1$

per combing hour

Raw Wool Wool Yarn

Allocated factory overhead cost $fill in the blank $569$bfaf$8$ef$9207$e$\_2$

$fill in the blank $569$bfaf$8$ef$9207$e$\_3$

Question Content Area

Activity$-$Based Costing

In order to compare WoolCorp$$s current method with activity$-$based costing, you interview the production staff and compile the following information, which relates to the costs for raw wool and wool yarn.

Type of Cost Activity Base Total Cost

Sorting Hours of sorting $$25,600$

Cleaning Units of cleaning machine power $38,400$

Combing Hours of combing machine use $1,300$

Raw Wool Wool Yarn

Hours of sorting required $1,0004,000$

Units of cleaning machine power required $1,8004,200$

Hours of combing machine use required $8020$

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 $fill in the blank $9$ae$93906406$b$07$f$\_1$

per sorting hour

Cleaning $fill in the blank $9$ae$93906406$b$07$f$\_2$

per unit of cleaning machine power

Combing $fill in the blank $9$ae$93906406$b$07$f$\_3$

per hour of combing machine use

In the following table, allocate the costs of sorting, cleaning, and combing based on the rates of activity consumed by each product$$s process. When required, round your answers to the nearest dollar.

Raw Wool Wool Yarn

Sorting cost $fill in the blank $9$ae$93906406$b$07$f$\_4$

$fill in the blank $9$ae$93906406$b$07$f$\_5$

Cleaning cost fill in the blank $9$ae$93906406$b$07$f$\_6$

fill in the blank $9$ae$93906406$b$07$f$\_7$

Combing cost fill in the blank $9$ae$93906406$b$07$f$\_8$

fill in the blank $9$ae$93906406$b$07$f$\_9$

Total cost $fill in the blank $9$ae$93906406$b$07$f$\_10$

$fill in the blank $9$ae$93906406$b$07$f$\_11$

Question Content Area

Final Question

After reviewing your work on the Single Plantwide Rate and Activity$-$Based Costing panels, which of the costing method would you recommend to WoolCorp, and why?