Question
H&Y Company uses four activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to
H&Y Company uses four activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to the product. The activities and related overhead costs are as follows:
Activity | Total Costs | Volume of Cost Driver | ||||||||
Material handling | $ 220,440 | 110,220 | parts | |||||||
Purchase orders | 220,520 | 37 | orders | |||||||
Set-up hours | 352,000 | 160 | hours | |||||||
Machining | 456,000 | 3,040 | machine hours | |||||||
Total costs | $1,248,960 |
The above activities are used by the two different products as follows:
PC-21 | WX-34 | ||||||||
Material handling | 76,210 | parts | 34,010 | parts | |||||
Purchase orders | 17 | 20 | |||||||
Set-up hours | 119 | hours | 41 | hours | |||||
Number of machine hours | 2,100 | machine hours | 940 | machine hours |
Calculate how much of the material handling cost will be allocated to PC-21.
Material handling cost allocated to PC-21 | $ |
Determine the ABC allocation rate for purchase orders.
Activity-based allocation rate | $ | per order |
Calculate how much of the set-up costs will be allocated to WX-34.
Set-up costs allocated to WX-34 | $ |
Calculate how much of the total activity costs will be allocated to PC-21.
Total activity costs allocated to PC-21 | $ |
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