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 $696,000 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 | $ 224,400 | 11,000 | MHs |
Machine setups | Number of setups | $ 129,600 | 240 | setups |
Product design | Number of products | $ 88,000 | 2 | products |
General factory | Direct labor-hours | $ 254,000 | 13,200 | DLHs |
Activity Measure | Product Y | Product Z |
---|---|---|
Machine-hours | 7,400 | 3,600 |
Number of setups | 60 | 180 |
Number of products | 1 | 1 |
Direct labor-hours | 8,400 | 4,800 |
13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?
14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?
15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?
7. Which of the four activities is a batch-level activity?
Machine setups
Product design
Machining
General factory
8. Which of the four activities is a product-level activity?
Product design
Machine setups
Machining
General factory
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