Question
Greenwood Company manufactures two products14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct
Greenwood Company manufactures two products14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:
| Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | |
|---|---|---|---|---|
| Machining | Machine-hours | $ 200,000 | 10,000 | MHs |
| Machine setups | Number of setups | $ 100,000 | 200 | setups |
| Production design | Number of products | $ 84,000 | 2 | products |
| General factory | Direct labor-hours | $ 300,000 | 12,000 | DLHs |
| Activity Measure | Product Y | Product Z |
|---|---|---|
| Machining | 8,000 | 2,000 |
| Number of setups | 40 | 160 |
| Number of products | 1 | 1 |
| Direct labor-hours | 9,000 | 3,000 |
1a. What is the activity rate for the Machine Setups activity cost pool?
|
1b. What is the activity rate for the Product Design activity cost pool?
|
1c. What is the activity rate for the General Factory activity cost pool?
|
1d. Which of the four activities is a batch-level activity?
multiple choice:
a. General factory activity
b. Product design activity
c. Machining activity
d. Machine setups activity
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College Accounting Chapters 1-30
Authors: John Price, M. David Haddock, Michael Farina
14th edition
978-1259284861, 1259284867, 77862392, 978-0077862398
