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 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: |
Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | ||
Machining | Machine-hours | $ | 203,000 | 10,000 | MHs |
Machine setups | Number of setups | $ | 121,900 | 230 | setups |
Production design | Number of products | $ | 87,000 | 2 | products |
General factory | Direct labor-hours | $ | 379,500 | 12,000 | DLHs |
Activity Measure | Product Y | Product Z |
Machine-hours | 7,300 | 2,700 |
Number of setups | 50 | 180 |
Number of products | 1 | 1 |
Direct labor-hours
What is the activity rate for the Machining activity cost pool? What is the activity rate for the Machine Setups activity cost pool? | 9,500 | 2,500 |
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