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 $729,600 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 $ 227,700 11,000 MHs Machine setups Number of setups $ 153,900 270 setups Product design Number of products $ 91,000 2 products General factory Direct labor-hours $ 257,000 13,200 DLHs   Activity Measure Product Y Product Z Machine-hours 7,700 3,300 Number of setups 60 210 Number of products 1 1 Direct labor-hours 8,700 4,500   Required: a. What is the company’s plantwide overhead rate? ______ per DLH   b. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole dollar amount.)   c. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.) ____ per MH

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 $729,600 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 $ 227,700 11,000 MHs
Machine setups Number of setups $ 153,900 270 setups
Product design Number of products $ 91,000 2 products
General factory Direct labor-hours $ 257,000 13,200 DLHs

 

Activity Measure Product Y Product Z
Machine-hours 7,700 3,300
Number of setups 60 210
Number of products 1 1
Direct labor-hours 8,700 4,500

 

Required:

a. What is the company’s plantwide overhead rate? ______ per DLH

 

b. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole dollar amount.)

 

c. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.) ____ per MH

 

 

 

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