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 $705,600 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 $ 192,000 10,000 MHs Machine setups Number of setups $ 50,400 120 setups Product design Number of products $ 76,000 2 products General factory Direct labor-hours $ 387,200 12,000 DLHs Activity Measure Product Y Product Z Machine-hours 6,200 3,800 Number of setups 50 70 Number of products 1 1 Direct labor-hours 10,000 2,000 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?
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