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Hickory 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 labour-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 Measure Estimated Overhead Cost Expected Activity
Machining Machine-hours $203,000 10,000 MH
Machine setups Number of setups $121,900 230 setups
Product design Number of products $87,000 2 products
General factory Direct labour-hours $379,500 12,000 DLHs


Activity Measure Product Y Product Z
Machine-hours 7,300 2,700
Number of setups 50 180
Number of products 1 1
Direct labour-hours 9,500 2,500

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 and Product Z?

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

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

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

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

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

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

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

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

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

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

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

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

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

Sagot :

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