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 $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 |
11. 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.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started