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	$	231,600			12,000	MHs
Machine setups	Number of setups	$	55,900			130	setups
Production design	Number of products	$	77,000			2	products
General factory	Direct labor-hours	$	364,500			15,000	DLHs

Activity Measure	Product Y			Product Z
Machining		7,300			4,700
Number of setups		40			90
Number of products		1			1
Direct labor-hours		7,300			7,700

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

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

Answer 1

Requirement 13

	Product Y	Product Z
Machine Setups	30.77%	69.23%

Requirement 14

	Product Y	Product Z
Product design	50.00%	50.00%

Requirement 15

	Product Y	Product Z
General factory	48.67%	51.33%

.

Working

Cost Drivers Rate
Activity	Cost Drivers	Total Activity Amount (A)	Level of Activity (B)	Activity Rate (C=A/B)
Machining	Machine hours	$    231,600.00	12000.00	$         19.30	per machine hour
Machining setups	Number of setups	$       55,900.00	130.00	$       430.00	per setup
Product design	Number of products	$       77,000.00	2.00	$ 38,500.00	per product
General factory	Direct labor hours	$    364,500.00	15000.00	$         24.30	per labor hour
		$    729,000.00

.

Overhead applied to (Product Y)
Product Y	Activity rate(A)	Activity Driver Incurred (B)	Overhead Assigned (C=A*B)
Machining	$             19.30	7300	$ 140,890.00
Machining setups	$           430.00	40	$     17,200.00
Product design	$     38,500.00	1	$     38,500.00
General factory	$             24.30	7300.00	$ 177,390.00
Total Overheads applied			$ 373,980.00

.

Overhead applied to (Product Z)
Product Z	Activity rate(A)	Activity Driver Incurred (B)	Overhead Assigned (C=A*B)
Machining	$             19.30	4700	$     90,710.00
Machine Setups	$           430.00	90	$     38,700.00
Product design	$     38,500.00	1	$     38,500.00
General factory	$             24.30	$         7,700.00	$ 187,110.00
Total Overheads			$ 355,020.00

	Product Y		Product Z		Total
Machining	$ 140,890.00	60.83%	$     90,710.00	39.17%	$   231,600.00	100%
Machine Setups	$     17,200.00	30.77%	$     38,700.00	69.23%	$     55,900.00	100%
Product design	$     38,500.00	50.00%	$     38,500.00	50.00%	$     77,000.00	100%
General factory	$ 177,390.00	48.67%	$ 187,110.00	51.33%	$   364,500.00	100%