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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 | Activity Measure | Estimated Overhead Cost | Expected Activity | ||
| Machining | Machine-hours | $ | 210,100 | 11,000 | MHs |
| Machine setups | Number of setups | $ | 45,100 | 110 | setups |
| Product design | Number of products | $ | 75,000 | 2 | products |
| General factory | Direct labor-hours | $ | 241,000 | 13,200 | DLHs |
| Activity Measure | Product Y | Product Z |
| Machine-hours | 6,100 | 4,900 |
| Number of setups | 50 | 60 |
| Number of products | 1 | 1 |
| Direct labor-hours | 7,100 | 6,100 |
1. . What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)
2. . Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round all intermediate calculations to 2 decimal places.)
3. . Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?
4. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)
5. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)
1) Activity rate for the general factory = 241000/13200 = 18.26 per labor hour
2) Total manufacturing overhead cost assigned to product Y
| Product Y | |
| Machining | 116510 |
| Machine setups | 20500 |
| Product design | 37500 |
| General factory | 129646 |
| Total | 304156 |
3) Total manufacturing overhead cost assigned to product Z
| Product Z | |
| Machining | 93590 |
| Machine setups | 24600 |
| Product design | 37500 |
| General factory | 111386 |
| Total | 267076 |
4) Percentage total overhead
| Product Y | Product Z | |
| Direct labor hour | 7100/13200 = 53.79% | 6100/13200 = 46.21% |
5) Machining cost
| Product Y | Product Z | |
| Machine hour | 6100/11100 = 54.95% | 4900/11100 = 44.14% |
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