Question

Greenwood Company manufactures two products—14,000 units of Product Y and 6,000 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	$	200,000			10,000	MHs
Machine setups	Number of setups	$	100,000			200	setups
Production design	Number of products	$	84,000			2	products
General factory	Direct labor-hours	$	300,000			12,000	DLHs

Activity Measure	Product Y			Product Z
Machining		8,000			2,000
Number of setups		40			160
Number of products		1			1
Direct labor-hours		9,000			3,000

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

Total maufacoring overhead cost

?

2. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

Total overhead cost	Product Y	Product Z
	?%	?%

3. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

Matching Cost	Product Y	Product Z
	?%	?%

4. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

Machine Setups Cost	Product Y	Product Z
	?%	?%

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

Product Design Cost	Product Y	Product Z
	?%	?%

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

General factory cost	Product Y	Product Z
	?%	?%

Answer 1

1
Total manufacturing overhead cost	237000
2
Total overhead cost:
Product Y	75.00%	=9000/12000
Product Z	25.00%	=3000/12000
3
Machining costs:
Product Y	80.00%	=8000/10000
Product Z	20.00%	=2000/10000
4
Machine Setups costs:
Product Y	20.00%	=40/200
Product Z	80.00%	=160/200
5
Product Design cost:
Product Y	50.00%	=1/2
Product Z	50.00%	=1/2
6
General Factory cost:
Product Y	75.00%	=9000/12000
Product Z	25.00%	=3000/12000

Workings:
Activity rate:
Machining	20	=200000/10000
Machine setups	500	=100000/200
Production design	42000	=84000/2
General factory	25	=300000/12000
Product Z:
Machining	40000	=2000*20
Machine setups	80000	=160*500
Production design	42000
General factory	75000	=3000*25
Total manufacturing overhead cost	237000