EcoFabrics has budgeted overhead costs of $963,900. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to

EcoFabrics has budgeted overhead costs of $963,900. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to
be 459,000 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 setups). Overhead allocated to the cutting cost pool is $367,200 and $596,700 is allocated to the design cost pool.
Additional information related to these pools is as follows.
Wool
Cotton
Total
Machine hours
102,000
102,000
204,000
Number of setups
1,020
510
1,530
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
Design
390 per setup

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