Business, 30.04.2021 20:50 pinkmoonlight

Crane has budgeted overhead costs of $954,450. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 454,500 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 $363,600 and $590,850 is allocated to the design cost pool. Additional information related to these pools is as follows. Wool Cotton Total
Machine hours 101,000 101,000 202,000
Number of setups 1,010 505 1,515

Required:
Calculate the overhead rate using activity based costing.

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