Question
Hickory Company manufactures two products15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct
Hickory Company manufactures two products15,000 units of Product Y and 7,000 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 $696,000 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 | $ | 224,400 | 11,000 | MHs |
Machine setups | Number of setups | $ | 129,600 | 240 | setups |
Product design | Number of products | $ | 88,000 | 2 | products |
General factory | Direct labor-hours | $ | 254,000 | 13,200 | DLHs |
Activity Measure | Product Y | Product Z |
Machine-hours | 7,400 | 3,600 |
Number of setups | 60 | 180 |
Number of products | 1 | 1 |
Direct labor-hours | 8,400 | 4,800 |
(Round your "Percentage" answers to 2 decimal place. for the answers below)
11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?
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