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 PoolActivity MeasureEstimated Overhead CostExpected
ActivityMachiningMachine-hours$206,00010,000MHsMachine setupsNumber of setups$145,600260setupsProduction designNumber of products$90,0002productsGeneral factoryDirect labor-hours$307,20012,000DLHs
Activity MeasureProduct YProduct ZMachining8,6001,400Number of setups50210Number of products11Direct labor-hours8,6003,400
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