Question

Exercise 17-3 Ecofabrics has budgeted overall costs of $1,086,750. It has located overhead on a plan de t r aductio n ) girector hours which wer e to be 517,500 for the currenye The company has decided to experiment with activity based on and has created activity C o d ed activity cost drivers. These two cost r e c o st overmachine hours and cost driver is rumber of setups Overhead allocated to the cutting 414,000 and 172,750 located to the design copol A n dormation related to these pools is as follows. Wool 115,000 1,150 Cotton 115.000 575 Total 230,000 1.725 Number of setups a rte 2 decimals . 12.25) Calculate the shade gatit c Overhead rates for activity-based costing Cutting permace hour Design per setup Determine the amount of overhead allocated to the wood product in and the cotton product line using activity-based costing Overhead Allocated Calculate the overhead rate using traditional approach (Aound answer to 2 decimal . 12.25.) prach mindrect labor hours were incurred evenly between the wool and content What amount of ever be w ed to the wood and common productessing the traditional Wool product line cotton product line Overhead Alocated Click if you would like to show Work for this question Deen Show Work

Answer 1

1) Overhead rate :

Cutting = 414000/230000 = 1.80 per machine hour

Design = 672750/1725 = 390 per setup

2) Overhead allocated

	Wool product line	Cotton product line
Cutting	207000	207000
Design	448500	224250
Total overhead	655500	431250

3) Overhead rate = 1086750/17500 = 62.10 per labor hour

4) Overhead allocated

	Wool product line	Cotton product line
Overhead Allocated	1086750/2 = 543375	543375