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 $597,000 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	$	213,400	11,000	MHs
Machine setups	Number of setups	$	61,600	140	setups
Product design	Number of products	$	78,000	2	products
General factory	Direct labor-hours	$	244,000	13,200	DLHs

Activity Measure	Product Y	Product Z
Machine-hours	6,400	4,600
Number of setups	60	80
Number of products	1	1
Direct labor-hours	7,400	5,800

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? (Round your "Percentage" answers to 2 decimal place.)

MAKE SURE ANSWERS ARE ALL PERCENTAGES!

Answer 1

Answer:
Total Manufacturing overhead	$597000
Activity Cost Pool	Measures	Estimated overhead Cost	Expected Activity	Cost in %
		$
Machining	Mach.-hrs	213400	11000 MHs	35.75
Machine Setup	No.of setups	61600	140 setups	10.32
Product design	No.of products	78000	2	13.07
General factory	Direct labour hrs.	244000	13200 DLHs	40.87
Total		597000		100
	Y	Z	Total
Number of products manufactured	15000 Units	7000 Units
Machine hrs. used	6400	4600	11000
Machine Cost assigned	(213400/11000)x6400	(213400/11000)x4600
	124160	89240	213400
Machine Cost assigned(%)	58.18	41.82
Machine cost/Total Machine cost.X100
No. of setups	60	80	140
Machine Setup Cost assigned	(61600/140)x60	(61600/140)x80
	26400	35200	61600
Machine Setup Cost assigned(%)	42.86	57.14
Setup cost/Total setup costX100
No. of products	1	1	2
Product design Cost assigned	(78000/2)x1	(78000/2)x1
	39000	39000
Product design Cost assigned(%)	50	50
Product design Cost/Total Product design Cost X100
Direct labour hrs.	7400	5800	13200
General Factory cost	(244000/13200)x7400	(244000/13200)x5800
	136787.8788	107212.1212
General Factory cost assigned (%)	56.06	43.94
General Factory cost/Total General Factory cost X100