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Horgen Corporation manufactures two products: Product X and Product Y. The company is considering implementing an activity based costing (ABC) system that allocates its manufacturing
Horgen Corporation manufactures two products: Product X and Product Y. The company is considering implementing an activity based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X and Y. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $108,250 5,000 MHS Machine setups Number of setups $22,750 650 setups Product design Number of products 566,000 30 products Order size Direct labor-hours $208,000 16,000 DLHS Activity Measure Product Product Y Machine hours 2,000 3,000 300 350 Number of setups Number of products Direct labor hours 20 10 10,000 6,000 1 Using the ABC system calculate the activity rate for each of the four activities 27 Using the ABC system, how much total manufacturing overhead cost would be assigned to product xe 3) Using the ABC system how much total manufacturing overhead cost would be assigned to product ?? 4) How much the plantwide rate using the traditional system that allocates total manufacturing overhead based on the direct lobor hours? 5) Which product is overallocated under the traditional system? Explain
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