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Hickory Company manufactures two products-15,000 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 products-15,000 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 $765,000 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Estimated Overhead Cost Expected Activity Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products$ 94,000 Direct labor-hours 260,000 13,200 DLHs $ 231,000 11,000 MHs 180,000 300 setups 2 products Activity Measure Product Y Product 2 Machine-hours Number of setups Number of products Direct labor-hours 8,000 60 3,000 240 7,000 6,200
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