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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 company’s plantwide overhead rate? (Round your answer to 2 decimal places.)

2. 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.)

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

4. What is the activity rate for the Machine Setups activity cost pool?

5. What is the activity rate for the Product Design activity cost pool?

Answer 1

1
Estimated Overhead	571200
Divide by Direct labor-hours	13200
Plantwide overhead rate	43.27
2
Product Y	307217	=7100*43.27
Product Z	263947	=6100*43.27
3
Estimated Overhead Cost	210100
Divide by Machine-hours	11000
Activity rate for the Machining activity	19.10
4
Estimated Overhead Cost	45100
Divide by Number of setups	110
Activity rate for the Machine Setups	410
5
Estimated Overhead Cost	75000
Divide by Number of products	2
Activity rate for the Product Design	37500