Question
Hickory Company manufactures two products13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct
Hickory Company manufactures two products13,000 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 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: (The total estimated overhead cost may not agree with the sum of allocated overhead costs to each product.)
Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | ||
Machining | Machine-hours | $ | 246,000 | 12,000 | MHs |
Machine setups | Number of setups | $ | 137,500 | 250 | setups |
Production design | Number of products | $ | 89,000 | 2 | products |
General factory | Direct labor-hours | $ | 357,000 | 14,000 | DLHs |
Activity Measure | Product Y | Product Z | |||
Machining | 7,500 | 4,500 | |||
Number of setups | 40 | 210 | |||
Number of products | 1 | 1 | |||
Direct labor-hours | 8,500 | 5,500 |
Required: Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)
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