Question

Required information

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 labour-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 Measure	Estimated Overhead Cost		Expected Activity
Machining	Machine-hours	$	227,700	11,000	MHs
Machine setups	Number of setups	$	153,900	270	setups
Production design	Number of products	$	91,000	2	products
General factory	Direct labour-hours	$	257,000	13,200	DLHs

  

Activity Measure	Product Y	Product Z
Machine-hours	7,700	3,300
Number of setups	60	210
Number of products	1	1
Direct labour-hours	8,700	4,500

Required:

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

	Activity rate per MH

Required:

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

	Activity rate per setup

Required:

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

	Activity rate per product

Required:

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

	Activity rate per DLH

Required:

Which of the four activities is a batch-level activity?

• Machining activity
• General factory activity
• Product design activity
• Machine setups activity

Required:

Which of the four activities is a product-level activity?

• Machining activity
• Product design activity
• General factory activity
• Machine setups activity

Required:

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Do not round intermediate calculations and round your final answer to the nearest dollar amount.)

	Total manufacturing overhead cost

Required:

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Do not round intermediate calculations and round your final answer to the nearest dollar amount.)

	Total manufacturing overhead cost

Answer 1

Question 1 and 2
Activity	Question 2	Measure	Estimated OH cost	Expected Activity	Question 1
Machining		Machine Hours	$             2,27,700.00	11,000.00	$                         20.70
Machine Setups	Batch Level	Number of setups	$             1,53,900.00	270.00	$                       570.00
Production design	Product Level	Number of products	$                 91,000.00	2.00	$                 45,500.00
General Factory		Direct Labour hours	$             2,57,000.00	13,200.00	$                         19.47

Question 3
Activity	Activity Rate	Expected Activity Y	Expected OH cost Y	Expected Activity Z	Expected OH cost Z
Machining	$                        20.70	7,700.00	$             1,59,390.00	3,300.00	$                 68,310.00
Machine Setups	$                      570.00	60.00	$                 34,200.00	210.00	$             1,19,700.00
Production design	$                45,500.00	1.00	$                 45,500.00	1.00	$                 45,500.00
General Factory	$                        19.47	8,700.00	$             1,69,386.36	4,500.00	$                 87,613.64