Hickory Company manufactures two products-15,000 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 $571,200 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 Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Product Y Product Z 6,100 50 4,900 60 Number of products 1 1 Direct labor-hours 7,100 6,100 Cost $ 210,100 Expected Activity 11,000 MHS $ 45,100 $ 75,000 $ 241,000 13,200 DLHS 110 setups 2 products "What is the activity rate for the Product Design activity cost pool?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Hickory Company manufactures two products-15,000 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 $571,200 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
Machining
Machine setups
Product design
General factory
Activity Measure
Machine-hours
Number of setups
Activity Measure
Machine-hours
Number of setups
Number of products
Direct labor-hours
Estimated Overhead
Product Y Product Z
6,100
50
4,900
60
Number of products
1
1
Direct labor-hours
7,100
6,100
Cost
$ 210,100
$ 45,100
$ 75,000
$ 241,000
Expected Activity
11,000 MHS
110 setups
2 products
13,200 DLHS
5. What is the activity rate for the Product Design activity cost pool?
Activity rate
per product](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8820e09e-6775-4b6f-bd1c-ef8eb99aacc2%2F11714901-2a36-4711-b0cf-cb5b552a2196%2Fcfliu6l_processed.jpeg&w=3840&q=75)
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