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 $571,200 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:
A. What is the activity rate for the General Factory activity cost pool?
B. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?
C. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?
D. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)
Estimated Overhead Expected Activity Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Cost $ 210,100 11,000 MHs $ 45,100 Machine-hour:s Number of setups Number of products $ 75,000 Direct labor-hours 110 setups 2 products 241,000 13,200 DLHs Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Product YProduct Z 4,900 60 6,100 50 1 7,100 6,100Step by Step Solution
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