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Hickory Company manufactures two products-13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on
Hickory Company manufactures two products-13,000 units of Product Y and 5,000 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 $745,200 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 S 242,400 12,000 MHs Machine setups Number of setups $ 114,400 220 setups Product design Number of products S 86,000 2 products General factory Direct labor-hours S 302,400 14,400 DLHS Activity Measure Product Y Product Z Machine-hours 7,200 4,800 Number of setups 40 180 Number of products 1 1 Direct labor-hours 8,200 6,200 Required: 1. What is the company's plantwide overhead rate? (Round your answer to 2 decimal places.) la. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? 1b. What is the activity rate for the Machining activity cost pool? 1c. What is the activity rate for the Machine Setups activity cost pool? 1d. What is the activity rate for the Product Design activity cost pool?
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