Rowland Textile Inc. manufactures two products: sweatshirts and T-shirts. The manufacturing process involves two activities:...
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Rowland Textile Inc. manufactures two products: sweatshirts and T-shirts. The manufacturing process involves two activities: cutting and sewing. Expected overhead costs and cost drivers are as follows: Cutting Sewing Overhead costs $320,000 $700,000 Machine hours 800,000 50,000 Direct labour hours 40,000 20,000
Required: I. Calculate the activity-based overhead rates. Use machine hours for the cutting activity and direct labour hours for the sewing activity. 2. Calculate a plantwide overhead rate using direct labour hours as the cost driver. 3. Assume the activities for sweatshirts are as follows:
Cutting Machine hours Direct labour hours 4 2 Sewing Machine hours 2 4 Calculate the overhead costs allocated to sweatshirts based on the activity-based overhead rates calculated in Requirement I. 4. Using the assumptions given in Requirement 3, calculate the overhead costs allocated to sweatshirts using the plantwide overhead rate in Requirement 2.
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