Question

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 Activity measure Estimated overhead cost Expected activity

machining Machine Hours $228,000 12,000MHs

machine setup Number of set ups $40,000 100 setups

production design Number of products $74,000 2 products

general factory Direct labor hours $288,000 12,000DLHs

Activity measure Product Y Product Z

Machining 7,000 5,000

Number of setups 40 60

Number of products 1 1

Direct labor hours 7,000 5,000

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

total overhead cost Y%- Z%-

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

Machining costs Y%- Z%-

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

Machine setups Y%- Z%-

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

Product Design Y%- Z%-

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

general factory cost Y%- Z%-

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
				Product Y			Product Z
Activity	Overhead	Expected activity	Activity Rate	Activity	Overhead cost	%	Activity	Overhead cost	%
	a	b	a/b=c	d	c*d=1	1/a	e	c*e=2	2/a
Machining	$228,000	12,000	$               19	7,000	$      133,000	58.33%	5,000	$        95,000	41.67%
Machine Setup	$ 40,000	100	$             400	40	$        16,000	40.00%	60	$        24,000	60.00%
Production design	$ 74,000	2	$        37,000	1	$        37,000	50.00%	1	$        37,000	50.00%
General Factory	$288,000	12,000	$               24	7,000	$      168,000	58.33%	5,000	$      120,000	41.67%
Total	$630,000				$      354,000	56.19%		$      276,000	43.81%