Exercise 17-3 (Part Level Submission) EcoFabrics has budgeted overhead costs of

Question

Exercise 17-3 (Part Level Submission) EcoFabrics has budgeted overhead costs of $973,350. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 463,500 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 setups). Overhead allocated to the cutting cost pool is $370,800 and $602,550 is allocated to the design cost pool. Additional information related to these pools is as follows. Wool Cotton Total Machine hours 103,000 103,000 206,000 Number of setups 1,030 515 1,545 (al) Your answer is correct. Calculate the overhead rate using activity based costing. (Round answers to 2 decimal places, e.g. 12.25.) Overhead rates for activity-based costing Cutting 1.8 per machine hour 390 per setup Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT Attempts: 2 of 15 used (a2) ! Your answer is incorrect. Try again. Determine the amount of overhead allocated to the wool product line and the cotton product line using activity-based costing Wool product lineCotton product line Overhead Allocated 667440 234994500 Click if you would like to Show Work for this question

Explanation / Answer

Amount of Overhead allocated :-

Particulars Wool Cotton Activity Based Costing :- Cutting : 103000 * $1.80 $185400 103000 * $1.80 $185400 Design : 1030 * $390 $401700 515 * $390 $200850 Total Cost Allocated $587100 $386250

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