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 | ||||
3. What is the activity rate for the Machining activity cost pool?
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Padhukas Students Handbook On Auditing And Assurance Including Multiple Choice Questions For CA Inter
Authors: CA G. Sekar, CA B Saravana Prasath
18th Edition
9390303087, 978-9390303083
