Question

Foundational [LO4-1, LO4-2, LO4-3, LO4-4]

Greenwood Company manufactures two products—14,000 units of Product Y and 6,000 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	Activity Measure	Estimated Overhead Cost			Expected Activity
Machining	Machine-hours	$	200,000			10,000	MHs
Machine setups	Number of setups	$	100,000			200	setups
Production design	Number of products	$	84,000			2	products
General factory	Direct labor-hours	$	300,000			12,000	DLHs

Activity Measure	Product Y			Product Z
Machining		8,000			2,000
Number of setups		40			160
Number of products		1			1
Direct labor-hours		9,000			3,000

Foundational 4-11

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

Answer 1