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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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