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 | $ | 200,000 | 10,000 | MHs |
| Machine setups | Number of setups | $ | 100,000 | 200 | setups |
| Production design | Number of products | $ | 84,000 | 2 | products |
| General factory | Direct labor-hours | $ | 300,000 | 12,000 | DLHs |
| Activity Measure | Product Y | Product Z | ||
| Machine-hours | 7,000 | 3,000 | ||
| Number of setups | 50 | 150 | ||
| Number of products | 1 | 1 | ||
| Direct labor-hours | 8,000 | 4,000 | ||
| ||||
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Authors: Felix I. Lessambo
1st Edition
3319905201, 9783319905204
