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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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