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Greenwood Company manufactures two products15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct
Greenwood Company manufactures two products15,000 units of Product Y and 7,000 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:
Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?
Activity cost pool | activity measure | estimated overhead cost | expected activity |
Machining | machine hours | 216700 | 11000 |
machine setups | number of setups | 79900 | 170 |
production design | number of products | 81000 | 2 |
general factory | direct labor hours | 247000 | 10000 |
Activity measure | product Y | product Z | |
machining | 67000 | 4300 | |
number of setups | 60 | 110 | |
number of products | 1 | 1 | |
direct labor hours | 7700 | 2300 |
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