Question

PLEASE ANSWER ALL QUESTIONS! Greenwood 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 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	$	231,000	11,000	MHs
Machine setups	Number of setups	$	180,000	300	setups
Production design	Number of products	$	94,000	2	products
General factory	Direct labor-hours	$	260,000	10,000	DLHs

  

Activity Measure	Product Y	Product Z
Machining	8,000	3,000
Number of setups	60	240
Number of products	1	1
Direct labor-hours	9,000	1,000

Required information

7.	Which of the four activities is a batch-level activity?
	Machining activity General factory activity Product design activity Machine setups activity

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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8.

value:
10.00 points

Required information

8.	Which of the four activities is a product-level activity?
	Machining activity Machine setups activity Product design activity General factory activity

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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9.

value:
10.00 points

Required information

9.	Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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10.

value:
10.00 points

Required information

10.	Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

Check my work

11.

value:
10.00 points

Required information

11.	Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your answers to 2 decimal places.)

     

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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12.

value:
10.00 points

Required information

12.	Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)

        

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

Check my work

13.

value:
10.00 points

Required information

13.	Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)

        

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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14.

value:
10.00 points

Required information

14.	Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)

       

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

Check my work

15.

value:
10.00 points

Required information

15.	Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)

  

Answer 1

	7
		Which of the four activities is a batch-level activity?
			NO	Machining activity
			No	General factory activity
			NO	Product design activity
			YES	Machine setups activity	Activity is performed for a batch of output
	8	Which of the four activities is a product-level activity?
			NO	Machining activity
			NO	Machine setups activity
			YES	Product design activity	This is an activity in support of specific product irrespective of volume of output
			NO	General factory activity
	9					A	B		C=A/B
			Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Expected Activity		RATE
			Machining	Machine-hours	$	231,000	11,000	MHs	21
			Machine setups	Number of setups	$	180,000	300	setups	600
			Production design	Number of products	$	94,000	2	products	47000
			General factory	Direct labor-hours	$	260,000	10,000	DLHs	26
					Total	765000
				D	E	F=D*E
			Activity Measure	Product Y	RATE	Activity cost
			Machining	8,000	$                                                              21.00	$        168,000
			Number of setups	60	$                                                            600.00	$          36,000
			Number of products	1	$                                                        47,000.00	$          47,000
			Direct labor-hours	9,000	$                                                              26.00	$        234,000
					TOTAL Activity based cost	$        485,000
					Total manufacturing overhead cost would be assigned to Product Y	$        485,000
		10
				D	E	F=D*E
			Activity Measure	Product Z	RATE	Activity cost
			Machining	3,000	$                                                              21.00	$          63,000
			Number of setups	240	$                                                            600.00	$        144,000
			Number of products	1	$                                                        47,000.00	$          47,000
			Direct labor-hours	1,000	$                                                              26.00	$          26,000
					TOTAL Activity based cost	$        280,000
					Total manufacturing overhead cost would be assigned to Product Z	$        280,000
		11	Total overhead cost	$                                    765,000	(485000+280000)
			Total direct labor hours	10000
			Plant wide overhead rate	$                                         76.50	(765000/10000)
			Overhead allocated to Y	$                                    688,500	(9000*76.5)
			Overhead allocated to Z	$                                       76,500	(1000*76.5)
			Percentage allocated to Y	90%	(688500/765000)*100
			Percentage allocated to Z	10%	(76500/765000)*101
		12	Machining Cost assigned to Y	$                                    168,000
			Machining Cost assigned to Z	$                                       63,000
			Percentage allocated to Y	73%	(168000/231000)*100
			Percentage allocated to Z	27%	(63000/231000)*101