Answer Happy

Concord has budgeted overhead costs of $982,800. It has allocated 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). Overhead allocated to the cutting cost pool is $374,400 and $608,400 is allocated to the design cost pool. Additional information related to these pools is as follows. Wool Cotton Total Machine hours 104,000 104,000 208,000 Number of setups 1,040 520 1,560

X Your answer is incorrect. What amount of overhead would be allocated to the wool and cotton product lines using the traditional approach, assuming direct labor hours were incurred evenly between the wool and cotton? Wool product line Cotton product line Overhead Allocated $ 1,031,940 tA 1,031,940