EcoFabrics has budgeted overhead costs of $982,800. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 468,000 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). Total estimated machine hours is 208,000, and total estimated number of setups is 1,560. Overhead allocated to the cutting cost pool is $374,400 and $608,400 is allocated to the design cost pool. Additional information related to product usage by these pools is as follows. Wool Cotton Machine hours 104,000 104,000 Number of setups 1,040 520 Calculate the overhead rate using activity based costing. (Round per machine hour to 2 decimal places, e.g. 12.25.) Overhead rates for activity-based costing Cutting $ Design $ eTextbook and Media per machine hour per setup Determine the amount of overhead assigned to the wool product line and the cotton product line using activity-based costing. Wool product line Cotton product line Overhead Allocated $ $ eTextbook and Media
EcoFabrics has budgeted overhead costs of $982,800. It has assigned overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 468,000 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). Total estimated machine hours is 208,000, and total estimated number of setups is 1,560. Overhead allocated to the cutting cost pool is $374,400 and $608,400 is allocated to the design cost pool. Additional information related to product usage by these pools is as follows. Wool Cotton Machine hours 104,000 104,000 Number of setups 1,040 520 Calculate the overhead rate using activity based costing. (Round per machine hour to 2 decimal places, e.g. 12.25.) Overhead rates for activity-based costing Cutting $ Design $ eTextbook and Media per machine hour per setup Determine the amount of overhead assigned to the wool product line and the cotton product line using activity-based costing. Wool product line Cotton product line Overhead Allocated $ $ eTextbook and Media
Chapter1: Financial Statements And Business Decisions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:EcoFabrics has budgeted overhead costs of $982,800. It has assigned overhead on a plantwide basis to its two
products (wool and cotton) using direct labor hours which are estimated to be 468,000 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). Total estimated machine hours is 208,000, and total estimated number of setups is
1,560. Overhead allocated to the cutting cost pool is $374,400 and $608,400 is allocated to the design cost
pool. Additional information related to product usage by these pools is as follows.
Wool
Cotton
Machine hours
104,000
104,000
Number of setups
1,040
520
Calculate the overhead rate using activity based costing. (Round per machine hour to 2 decimal places,
e.g. 12.25.)
Overhead rates for activity-based costing
Cutting
Design
eTextbook and Media
per machine hour
per setup
Determine the amount of overhead assigned to the wool product line and the cotton product line using
activity-based costing.
Wool product line
Cotton product line
Overhead Allocated
$
eTextbook and Media
Calculate the overhead rate using traditional approach. (Round answer to 2 decimal places, e.g. 12.25.)
Overhead rates using the traditional approach
$
per direct labor hour
eTextbook and Media
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