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EcoFabrics has budgeted overhead costs of $1,001,700. It has assigned overhead on a plantwide basis...

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Accounting

EcoFabrics has budgeted overhead costs of $1,001,700. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 477,000 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 setup5). Total estimated machine hours is 212,000, and total estimated number of setups is 1,590. Overhead allocated to the cutting cost pool is $381,600 and $620,100 is allocated to the design cost pool. Additional information related to product usage by these pools is as follows.
\table[[,Wool,Cotton,],[Machine hours,106,000,106,000,],[Number of setups,1,060,530,],[,,,,]]
(a1)
Calculate the overhead rate using activity based costing. (Round per machine hour to 2 decimal places, e.g.12.25.)
Overhead rates for activity-based costing
Cutting $ per machine hour
Design
$ per setup
image

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