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Jackets Galore, Inc. presently uses the traditional costing method for allocating overhead for their 6 lines of seasonal coats. The company is considering moving to an activity based costing approach and provides the following information:

Activity Cost Pools Estimated ANNUAL Product A Product B Overhead Designing (designer hours) $450,000 7,000 5,000 Sizing and cutting (Machine hours) $4,000,000 90,000 70,000 Stitching and trimming (Labour hours) $1,440,000 30,000 50,000 Wrapping and packing (Finished Units) $336,000 16,000 16,000

Hint ** do not need Direct Labour Hours, use Machine Hours**

a) If the company allocated its overhead based on machine hours, what is the estimated overhead per machine hour?

$ per machine hour

b) If the company moves to an ABC approach, what would the overhead allocation be per activity cost pool?

Designing: $ per designer hour

Sizing and cutting: $ per machine hour

Stitching and trimming: $ per labour hour

Wrapping and packing: $ per finished unit

c) What would the overhead allocated under each method be based on actual activity in June?

Activity Cost Pools	Actual use of cost drivers per activity
Designing	900 designer hours
Sizing and cutting	10,000 machine hours
Stitching and trimming	7000 labour hours
Wrapping and packing	2500 finished units

Traditional $

Designing: $

Sizing and cutting: $

Stitching and trimming $

Wrapping and packing: $

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