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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 $674,000 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 | $ | 216,700 | 11,000 | MHs |
| Machine setups | Number of setups | $ | 79,900 | 170 | setups |
| Product design | Number of products | $ | 81,000 | 2 | products |
| General factory | Direct labor-hours | $ | 296,400 | 13,200 | DLHs |
| Activity Measure | Product Y | Product Z |
| Machine-hours | 6,700 | 4,300 |
| Number of setups | 60 | 110 |
| Number of products | 1 | 1 |
| Direct labor-hours | 7,700 | 5,500 |
| 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? | ||
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