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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 $729,600 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 | $ 227,700 | 11,000 | MHs |
Machine setups | Number of setups | $ 153,900 | 270 | setups |
Product design | Number of products | $ 91,000 | 2 | products |
General factory | Direct labor-hours | $ 257,000 | 13,200 | DLHs |
Activity Measure | Product Y | Product Z |
---|---|---|
Machine-hours | 7,700 | 3,300 |
Number of setups | 60 | 210 |
Number of products | 1 | 1 |
Direct labor-hours | 8,700 | 4,500 |
14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?
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