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	$	249,600	12,000	MHs
Machine setups	Number of setups	$	162,400	280	setups
Production design	Number of products	$	92,000	2	products
General factory	Direct labor-hours	$	309,600	12,000	DLHs

  

Activity Measure		Product Y	Product Z
Machining		7,800	4,200
Number of setups		40	240
Number of products		1	1
Direct labor-hours		8,800	3,200
1.	What is the company’s plantwide overhead rate? (Round your answer to 2 decimal places.) Predetermined overhead rate_____ per DLH

      

2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) Manufacturing overhead allocated: Product Y _______ Product Z____________ 3. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.) Activity rate________ per MH 4. What is the activity rate for the Machine Setups activity cost pool? (Round your answer to 2 decimal places.) Activity rate _______ per set up 5. What is the activity rate for the Product Design activity cost pool? (Round your answer to 2 decimal places.) Activity rate ________ per set up 6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.) Activity rate _________ per DHL 7. Which of the four activities is a batch-level activity? a. Machining activity b. General factory activity c. Product design activity d. Machine setups activity 8. Which of the four activities is a product-level activity? a. General factory activity b. Product design activity c. Machining activity d. Machine setups 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.) Total Manufacturing overhead costs:_______ 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.) Total Manufacturing overhead costs__________ 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.) Total Overhead costs: Product Y _____   % Product Z_____% 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.) Machine costs Product Y ____%   Product Z_____% 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.) Machine set up costs:   Product Y _____% Product Z ____% 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.) Product design cost: Product Y ______% Product Z _____% 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.) General Factory Costs: Product Y _____% Product Z _____%

Answer 1

1	Predetermined overhead rate=Total estimated overhead cost/Expected direct labor hours
	Total estimated overhead cost:
	Machining		249600
	Machine setups		162400
	Production design		92000
	General factory		309600
	Total		813600
	Expected direct labor hours=12000 hours
	Predetermined overhead rate=813600/12000=$67.8 per DLH
2	Manufacturing overhead allocated=Direct labor hours in the department*Predetermined overhead rate
	Product Y=8800*67.8=$596640
	Product Z=3200*67.8=$216960
	Activity rate=Estimated Overhead Cost/Expected Activity
3	For Machining,Activity rate=249600/12000=$20.8 per MH
4	For Machine setups,Activity rate=162400/280=$580 per setup
5	For production design,Activity rate=92000/2=$46000 per product
6	For gheneral factory,Activity rate=309600/12000=$25.8 per DLH
7	d. Machine setups activity
8	b. Product design activity
9	Overhead allocated=Expected activity for the product*Activity rate
					Y
	Machining		7800*20.8		162240
	Machine setups		40*580		23200
	Production design		1*46000		46000
	General factory		8800*25.8		227040
					458480
10	Overhead allocated=Expected activity for the product*Activity rate
					Z
	Machining		4200*20.8		87360
	Machine setups		240*580		139200
	Production design		1*46000		46000
	General factory		3200*25.8		82560
					355120
11				Y	Z	Total
	Overhead allocated			596640	216960	813600
	Precentage			73.33%	26.67%
				Y	Z	Total
12	Machining			162240	87360	249600
	Percentage			65.00%	35.00%
13	Machine setups			23200	139200	162400
	Percentage			14.29%	85.71%
14	Production design			46000	46000	92000
	Percentage			50.00%	50.00%
15	General factory			227040	82560	309600
	Percentage			73.33%	26.67%