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Hickory Company manufactures two products-14,000 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 products-14,000 units of Product Y and 6,000 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: Estimated Overhead Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours CostExpected Activity $203,000 0,000 MHs $ 121,900 $ 87,000 230 setups 2 products 379,500 2,000 DLHs Activity Measure ProductY Product Z 2,700 180 7,300 50 Machine-hours Number of setups Number of products Direct labor-hours 9,500 2,500
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