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:

1.What is the company's plantwide overhead rate?

2.Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y? How much is allocated to Product Z?

3What is the activity rate for the Machining activity cost pool?

4What is the activity rate for the Machine Setups activity cost pool?

5What is the activity rate for the Product Design activity cost pool?

6What is the activity rate for the General Factory activity cost pool?

7Which of the four activities is a batch-level activity? Why?

8Which of the four activities is a product-level activity? Why?

9Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?

10Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

11Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y? What percentage is allocated to Product Z?

12Using the ABC system, what percentage of the Machining costs is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in question 11? Why?

13Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in question 11? Why?

14Using the ABC system, what percentage of the Product Design cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in question 11? Why?

15Using the ABC system, what percentage of the General Factory cost is assigned to Product Y? What percentage is assigned to Product Z? Are these percentages similar to those obtained in question 11? Why?

costpool	activity measure	estimated overhead cost	expected activity
machining	machine-hour	$200,000	10,000MHs
machine setups	number of setup	$100,000	200setup
production design	number ofproducts	$84000	2products
general factory	direct labor hours	$300,000	12,000DLHs

activity measure	productY	productZ
machining	8,000	2,000
number of setups	40	160
number of products	1	1
direct lanbor hours	9000	3000

Answer 1