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Hickory Company manufactures two products 15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on
Hickory Company manufactures two products 15,000 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 $765,000 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: Estimated Expected Overhead Activity Cost Pool Activity Measure Activity Cost Machining Machine-hours 231,000 11,000 MHs Machine setups Number of setups 180,000 300 setups Product design General factory Number of products 94, 000 2 products Direct labor-hours 260,000 13,200 DLHs Activity Measure Product Y Product Z Machine-hours 8,000 3,000 Number of setups 240 60 Number of products Direct labor-hours 7,000 6,200 What is the activity rate for the Product Design activity cost pool? Activity rate per product
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