NEXT Exercise 173 Part Level Submission EcoFabrics has budge

NEXT Exercise 17-3 (Part Level Submission) EcoFabrics has budgeted overhead costs of $1,181,250. It has allocated overhead on using costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting (cost driver is machine a plantwide basis to its two products(wool and cotton) direct labor hours which are estimated to be 562,500 for the current year. The company has decided to experiment with activity-based driver is number of setups). Overhead allocated to the cutting cost pool is $450,000 and $731,250 is allocated to the design cost pool. Additional information related to these pools is as follows Wool ottonTotal 125,000 125,000 250,000 Machine hours Number of setups 1,250 625 1,875 (a1) 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 per machine hour per setup Click if you would like to Show Work for this question: Open Show Work Attempts: 0 of 5 used SAVE FOR LATER (a2) The parts of this question must be completed in order. Ths part wil be available when you complete the part above. (b1)

Solution

(a1) Cutting = $450,000 / 250,000 = $1.80 per machine hour

Design = $731,250 / 1,875 = $390.00 per setup