Question
Hickory 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
Hickory 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 labour-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 Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 200,000 10,000 MH Machine setups Number of setups $ 100,000 200 setups Production design Number of products $ 84,000 2 products General factory Direct labour-hours $ 300,000 12,000 DLHs ______________ Activity Measure Product Y Product Z Machine-hours 7,000 3,000 Number of setups 50 150 Number of products 1 1 Direct labour-hours 8,000 4,000 ______________ Required: What is the companys plantwide overhead rate?
Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? What is the activity rate for the Machining activity cost pool? Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3))
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