Question

2-15

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	$	195,000			10,000	MHs
Machine setups	Number of setups	$	67,500			150	setups
Production design	Number of products	$	79,000			2	products
General factory	Direct labor-hours	$	245,000			10,000	DLHs

Activity Measure	Product Y			Product Z
Machining		7,500			2,500
Number of setups		50			100
Number of products		1			1
Direct labor-hours		7,500			2,500

Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your intermediate calculations and final answers to 2 decimal places.)

Answer 1

Overhead	Estimated Overhead	Total Cost Driver	Overhead allocation rate per unit	Product Y	Product Z	Raw Wool	Wool Yarn
Machining	$                195,000.00	10000	$                  19.50	7500	2500	$      146,250.00	$         48,750.00
Machine Setups	$                  67,500.00	150	$               450.00	50	100	$         22,500.00	$         45,000.00
Production Design	$                  79,000.00	2	$         39,500.00	1	1	$         39,500.00	$         39,500.00
General Factory	$                245,000.00	10000	$                  24.50	7500	2500	$      183,750.00	$         61,250.00
Total	$            586,500.00					$   392,000.00	$   194,500.00

===>>>Percentage of the General Factory cost is assigned to Product Y and Product Z :

Overhead	Product Y	Product Z
General Fatory	7,500/10,000 = 75%	2,500 / 10,000 = 25%