Required information Greenwood Company manufactures two products-13,000 units of Product Y and 5,000 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 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 Production design General factory Activity Measure Machining Number of setups Number of products Direct labor-hours Activity Measure Machine-hours. Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 249,600 $ 162,400 $ 92,000 $ 309,600 Product Y Product Z 8,800 3,200 40 240 1 1 8,800 3,200 Expected Activity 12,000 MHS 280 setups 2 products 12,000 DLHS
Required information Greenwood Company manufactures two products-13,000 units of Product Y and 5,000 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 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 Production design General factory Activity Measure Machining Number of setups Number of products Direct labor-hours Activity Measure Machine-hours. Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 249,600 $ 162,400 $ 92,000 $ 309,600 Product Y Product Z 8,800 3,200 40 240 1 1 8,800 3,200 Expected Activity 12,000 MHS 280 setups 2 products 12,000 DLHS
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
Greenwood Company manufactures two products-13,000 units of Product Y and 5,000 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 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
Production design
General factory
Windows
DESKTOP-
Windows
Activity Measure
Machining
Number of setups
Number of products
Direct labor-hours.
Plantwide overhead rate
77
+1 (252) 484-2153
Oh nun
Activity Measure
Machine-hours
Number of setups
Number of products
Direct labor-hours
FEB
22
Product Y Product Z
8,800
3,200
40
240
1
3,200
1
8,800
Required:
1. What is the company's plantwide overhead rate? (Round your answer to 2 decimal places.)
Prev
per DLH
Estimated
Overhead Cost
$ 249,600
$ 162,400
$92,000
$ 309,600
2/7/23
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2
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iMessage
Expected Activity
12,000 MHS
tv
280 setups
12,000 DLHS
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2 products
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Expert Solution
Step 1
Activity-based costing is the method used to allocate indirect costs like utilities, salaries, insurance, etc. to the product and services. Activity-based costing is preferred because it allocated the overheads based on events that give raises to overhead.
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