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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 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: Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labpur-hours Estimated Overhead Cost $ 195,000 $ 67,500 $ 79,000 $ 245,000 Expected Activity 10,000 MHs 150 setups 2 products 12,000 DLHs Activity Measure Machine-hours Number of setups Number of products Direct labour-hours Product Y 6,500 50 1 7,500 Product Z 3,500 100 1 4,500 What is the activity rate for the Product Design activity cost pool? (your answer should be PER PRODUCT)
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