Question - 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 labor- hours. It is considering implementing an activity-based costing (ABC) system that allocates all $684,000 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:
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Activity Cost Pool
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Activity Measure
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Machining
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Machine-hours
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Machine setup
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Number of setups
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Product design
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Number of products
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General factory
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Direct labor-hours
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Estimated Overhead cost
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Expected Activity
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$200,000
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10,000 MHs
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$100,000
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200 setups
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$84,000
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2 products
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$300,000
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12,000 DLHs
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Activity Measure
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Product Y
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Product Z
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Machine-hours
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7,000
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3,000
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Number of setups
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50
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150
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Number of products
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1
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1
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Direct labor-hours
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8,000
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4,000
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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?
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?
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?