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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
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 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 Cost Pool Machining Machine setups Production design General factory Estimated Overhead Cost $ 200,000 Activity Measure Machine-hours Number of setups Number of products $ 100,000 $ 84,000 Direct labour-hours $ 300,000 Expected Activity 10,000 MHS 200 setups 2 products 12,000 DLH Number of products Activity Measure Machining Number of setups Product YProduct 2 7,000 3,000 150 1 Direct labour-hours 8,000 1 4,000 Required: What is the activity rate for the Machining activity cost pool? Activity rate per MH
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