Question

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 $674,000 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	$	216,700	11,000	MHs
Machine setups	Number of setups	$	79,900	170	setups
Product design	Number of products	$	81,000	2	products
General factory	Direct labor-hours	$	296,400	13,200	DLHs

Activity Measure	Product Y	Product Z
Machine-hours	6,700	4,300
Number of setups	60	110
Number of products	1	1
Direct labor-hours	7,700	5,500

rev: 03_28_2018_QC_CS-122670

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round all intermediate calculations to 2 decimal places.)

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

11. 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.)

12. 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.)

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

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

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

Answer 1

Activity cost pool	Activity rate		Product Y	Product Z
Machining	$19.7 ($216,700/11,000	per MH	$131,990 (6,700*$19.7)	$84,710 (4,300*$19.7)
Machine setup	$470 (79,900/170)	per setup	28,200 (60*$470)	51,700 (110*$470)
Product design	$40,500 (81,000/2)	per product	40,500	40,500
General factory	$22.45 (296,400/13,200)	per DLHs	172,900 (7,700*$22.4545)	123,500 (5,500*$22.4545)
Total			$373,590	$300,410

9. Total manufacturing overhead cost assigned to Product Y = $373,590

10. Total manufacturing overhead cost assigned to Product Z = $300,410

Plantwide overhead rate = Estimated manufacturing overhead / Estimated direct labor hours

Plantwide overhead rate = $674,000 / 13,200 = $51.0606 per DLH

11. Percentage of total overhead cost allocated to:

Product Y = (7,700*$51.0606) / $674,000 *100

Product Y = $393,167 / $674,000 *100 = 58.33%

Product Z = (5,500*$51.0606) / $674,000 *100

Product Z = $280,833 / $674,000 *100 = 41.67%

12. Percentage of machining cost assigned to:

Product Y = $131,990 / $216,700 *100 = 60.91%

Product Z = $84,710 / $216,700 *100 = 39.09%

13.

Percentage of machine setups cost assigned to:

Product Y = $28,200 / 79,900 *100 = 35.29%

Product Z = $51,700 / 79,900 *100 = 64.71%

14.

Percentage of product design cost assigned to:

Product Y = $40,500 / 81,000 *100 = 50%

Product Z = $40,500 / 81,000 *100 = 50%

15.

Percentage of general factory cost assigned to:

Product Y = $172,900 / 296,400 *100 = 58.33%

Product Z = $123,500 / 296,400 *100 = 41.67%