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Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plant wide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all 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 Activity Cost Pool Activity Measure Overhead Cost Expected Activity Machining Machine setups Product design General factory Machine-hours Number of setups Number of products Direct labor-hours $200,000 $100,000 $84,000 $300,000 10,000 MHs 200 setups 2 products 12,000 DLHS .. ... Activity Measure Machine-hours... Number of setups. Number of products.. Direct labor-hours. Product Y 7,000 Product Z 3,000 150 50 1 1 .... 8,000 4,000 Required: 1. What is the company's plant wide overhead rate? 2. Using the plant wide overhead rate, how much manufacturing overhead cost is allocated toProduct Y? How much is allocated to Product Z? 3. What is the activity rate for the Machining activity cost pool? 4. What is the activity rate for the Machine Setups activity cost pool? 5. What is the activity rate for the Product Design activity cost pool? 6. What is the activity rate for the General Factory activity cost pool? 7. Which of the four activities is a batch-level activity? Why? 8. Which of the four activities is a product-level activity? Why? 9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plant wide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all 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 Activity Cost Pool Activity Measure Overhead Cost Expected Activity Machining Machine setups Product design General factory Machine-hours Number of setups Number of products Direct labor-hours $200,000 $100,000 $84,000 $300,000 10,000 MHs 200 setups 2 products 12,000 DLHS .. ... Activity Measure Machine-hours... Number of setups. Number of products.. Direct labor-hours. Product Y 7,000 Product Z 3,000 150 50 1 1 .... 8,000 4,000 Required: 1. What is the company's plant wide overhead rate? 2. Using the plant wide overhead rate, how much manufacturing overhead cost is allocated toProduct Y? How much is allocated to Product Z? 3. What is the activity rate for the Machining activity cost pool? 4. What is the activity rate for the Machine Setups activity cost pool? 5. What is the activity rate for the Product Design activity cost pool? 6. What is the activity rate for the General Factory activity cost pool? 7. Which of the four activities is a batch-level activity? Why? 8. Which of the four activities is a product-level activity? Why? 9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Q.No.3 Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plant wide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all 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 Activity Cost Pool Activity Measure Overhead Cost Expected Activity Machining Machine setups Product design General factory Machine-hours Number of setups Number of products Direct labor-hours $200,000 $100,000 $84,000 $300,000 10,000 MHs 200 setups 2 products 12,000 DLHS Activity Measure Machine-hours. Product Y 7,000 50 Product Z 3,000 150 Number of setups Number of products Direct labor-hours... 1 1 8,000 4,000 Required: 1. What is the company's plant wide overhead rate? 2. Using the plant wide overhead rate, how much manufacturing overhead cost is allocated toProduct Y? How much is allocated to Product Z? 3. What is the activity rate for the Machining activity cost pool? 4. What is the activity rate for the Machine Setups activity cost pool? 5. What is the activity rate for the Product Design activity cost pool? 6. What is the activity rate for the General Factory activity cost pool? 7. Which of the four activities is a batch-level activity? Why? 8. Which of the four activities is a product-level activity? Why? 9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? 11. Using the plant wide overhead rate, what percentage of the total overhead cost is allocated to Product Y? What percentage is allocated to Product Z? 12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why?
Transcribed Image Text:Q.No.3 Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plant wide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all 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 Activity Cost Pool Activity Measure Overhead Cost Expected Activity Machining Machine setups Product design General factory Machine-hours Number of setups Number of products Direct labor-hours $200,000 $100,000 $84,000 $300,000 10,000 MHs 200 setups 2 products 12,000 DLHS Activity Measure Machine-hours. Product Y 7,000 50 Product Z 3,000 150 Number of setups Number of products Direct labor-hours... 1 1 8,000 4,000 Required: 1. What is the company's plant wide overhead rate? 2. Using the plant wide overhead rate, how much manufacturing overhead cost is allocated toProduct Y? How much is allocated to Product Z? 3. What is the activity rate for the Machining activity cost pool? 4. What is the activity rate for the Machine Setups activity cost pool? 5. What is the activity rate for the Product Design activity cost pool? 6. What is the activity rate for the General Factory activity cost pool? 7. Which of the four activities is a batch-level activity? Why? 8. Which of the four activities is a product-level activity? Why? 9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? 11. Using the plant wide overhead rate, what percentage of the total overhead cost is allocated to Product Y? What percentage is allocated to Product Z? 12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why? 15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in requirement 11? Why?
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