XYZ Manufacturing produces two products: Widget X and Widget Y. Annual production and sales are 2,000 units of Widget X and 1,800 units of Widget Y. The company uses direct labor-hours to apply manufacturing overhead to products. Widget X requires 0.25 direct labor hours per unit, and Widget Y requires 0.45 direct labor hours per unit. The total estimated overhead for next period is $78,400. The company is considering implementing an activity-based costing system with three overhead activity cost pools: • Machine Setup: $28,500 • Material Handling: $12,900 ⚫ General Manufacturing: $37,000 • Calculate the predetermined overhead rate under the traditional costing system.

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Chapter6: Activity-based, Variable, And Absorption Costing
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XYZ Manufacturing produces two products: Widget X and Widget Y.
Annual production and sales are 2,000 units of Widget X and 1,800
units of Widget Y. The company uses direct labor-hours to apply
manufacturing overhead to products. Widget X requires 0.25 direct
labor hours per unit, and Widget Y requires 0.45 direct labor hours per
unit. The total estimated overhead for next period is $78,400.
The company is considering implementing an activity-based costing
system with three overhead activity cost pools:
•
Machine Setup: $28,500
•
Material Handling: $12,900
⚫ General Manufacturing: $37,000
•
Calculate the predetermined overhead rate under the traditional costing
system.
Transcribed Image Text:XYZ Manufacturing produces two products: Widget X and Widget Y. Annual production and sales are 2,000 units of Widget X and 1,800 units of Widget Y. The company uses direct labor-hours to apply manufacturing overhead to products. Widget X requires 0.25 direct labor hours per unit, and Widget Y requires 0.45 direct labor hours per unit. The total estimated overhead for next period is $78,400. The company is considering implementing an activity-based costing system with three overhead activity cost pools: • Machine Setup: $28,500 • Material Handling: $12,900 ⚫ General Manufacturing: $37,000 • Calculate the predetermined overhead rate under the traditional costing system.
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