Question

PLEASE ANSWER ALL QUESTIONS! Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 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	$	231,000	11,000	MHs
Machine setups	Number of setups	$	180,000	300	setups
Production design	Number of products	$	94,000	2	products
General factory	Direct labor-hours	$	260,000	10,000	DLHs

  

Activity Measure	Product Y	Product Z
Machining	8,000	3,000
Number of setups	60	240
Number of products	1	1
Direct labor-hours	9,000	1,000

1.

value:
10.00 points

Required information

Required:

1.	What is the company’s plantwide overhead rate? (Round your answer to 2 decimal places.)

      

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eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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2.

value:
10.00 points

Required information

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.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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3.

value:
10.00 points

Required information

3.	What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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4.

value:
10.00 points

Required information

4.	What is the activity rate for the Machine Setups activity cost pool? (Round your answer to 2 decimal places.)

       

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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5.

value:
10.00 points

Required information

5.	What is the activity rate for the Product Design activity cost pool? (Round your answer to 2 decimal places.)

       

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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6.

value:
10.00 points

Required information

6.	What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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7.

value:
10.00 points

Required information

7.	Which of the four activities is a batch-level activity?
	Machining activity General factory activity Product design activity Machine setups activity

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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8.

value:
10.00 points

Required information

8.	Which of the four activities is a product-level activity?
	Machining activity Machine setups activity Product design activity General factory activity

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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9.

value:
10.00 points

Required information

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.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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10.

value:
10.00 points

Required information

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.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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11.

value:
10.00 points

Required information

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.)

     

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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12.

value:
10.00 points

Required information

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.)

        

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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13.

value:
10.00 points

Required information

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.)

        

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

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14.

value:
10.00 points

Required information

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.)

       

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.eBook: Understand the basic approach in activity-based costing and how it differs from conventional costing.

Check my work

15.

value:
10.00 points

Required information

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.)

      

eBook & Resources

eBook: Compute activity rates for an activity-based costing system.eBook: Compute product costs using activity-based costing.eBook: Contrast the product costs computed under activity-based costing and conventional costing methods.

Answer 1

Answer 1.

Estimated Total Overhead Cost = $231,000 + $180,000 + $94,000 + $260,000
Estimated Total Overhead Cost = $765,000

Estimated Total direct labor-hours = 9,000 + 1,000
Estimated Total direct labor-hours = 10,000

Plantwide Overhead Rate = Estimated Total Overhead Cost / Estimated Total direct labor-hours
Plantwide Overhead Rate = $765,000 / 10,000
Plantwide Overhead Rate = $76.50

Answer 2.

Product Y:

Plantwide Overhead Rate = $76.50
Expected Direct labor-hours = 9,000

Manufacturing Overhead allocated = Plantwide Overhead Rate * Expected Direct labor-hours
Manufacturing Overhead allocated = $76.50 * 9,000
Manufacturing Overhead allocated = $688,500

Product Z:

Plantwide Overhead Rate = $76.50
Expected Direct labor-hours = 1,000

Manufacturing Overhead allocated = Plantwide Overhead Rate * Expected Direct labor-hours
Manufacturing Overhead allocated = $76.50 * 1,000
Manufacturing Overhead allocated = $76,500

Answer 3.

Activity Rate = Estimated Overhead / Expected Activity level
Activity Rate = $231,000 / 11,000
Activity Rate = $21.00 per MH

Answer 4.

Activity Rate = Estimated Overhead / Expected Activity level
Activity Rate = $180,000 / 300
Activity Rate = $600.00 per setup

Answer 5.

Activity Rate = Estimated Overhead / Expected Activity level
Activity Rate = $94,000 / 2
Activity Rate = $47,000 per product

Answer 6.

Activity Rate = Estimated Overhead / Expected Activity level
Activity Rate = $260,000 / 10,000
Activity Rate = $26.00 per DLH