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  3. american fabrics has budgeted overhead costs of $1

American Fabrics has budgeted overhead costs of $1, 287,000. It has allocated overhead on a...

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Accounting

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American Fabrics has budgeted overhead costs of $1, 287,000. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct lab hours which are estimated to be 585,000 for the current year. The company has decided to experiment with activity-based costing and bas created two activity 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 $468,000 and $819,000 is allocated to the design cost pool. Additional Information related to these pools is as follows. Calculate the overhead rate using activity based costing and then calculate if the traditional approach were used. (Round answers to 2 decimal place $12.25.)

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