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	6,300	5,700
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 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.) 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 answers to 2 decimal places.)

Answer 1

Part 13

Activity cost pool	(a) estimated overhead cost	(b) expected activity	(a÷b) activity rate
Machine setups	55900	130 setups	430 per set up

	Product Y		Product Z
	Expected activity	amount	expected activity	amount
Machine setups at 430 per setup	40	17200 (430*40)	90	38700 (430*90)

	Product Y		Product Z		Total
Activity based costing	(a) Amount	(a÷c) %	(b) Amount	(b÷c) %	(c) Amount
Machine setups	17200	30.77%	38700	69.23%	55900

Part 14

Activity cost pool	(a) expected overhead cost	(b) expected activity	(c) activity rate
Product design	77000	2 products	38500 per product

	Product Y		Product Z
	Expected activity	amount	expected activity	amount
Product design at 38500 per product	1	38500 (38500*1)	1	38500 (38500*1)

	Product Y		Product Z		Total
Activity based costing	(a) amount	(a÷c) %	(b) amount	(b÷c) %	(c) amount
Product design	38500	50.00%	38500	50.00%	77000

Part 15

Activity based costing	(a) expected overhead cost	(b) expected activity	(c) activity rate
General factory	364500	15000 DLHs	24.30 per DLH

	Product Y		Product z
	Expected activity	amount	expected activity	amount
General factory at 24.30 per DLH	7300	177390 (7300*24.30)	7700	187110 (7700*24.30)

	Product Y		Product Z		Total
Activity based costing	(a) amount	(a÷c) %	(b) amount	(b÷c) %	(c) amount
General factory	177390	48.67%	187110	51.33%	364500