Question - Hickory Company manufactures two products-13,000 units of Product Y and 5,000 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 $ 228,000 12,000 MHs
Machine setups Number of setups $40,000 100setups
Production design Number of products $74,000 2 products
General factory Direct labor-hours $ 288,000 14,400 DLHs
Activity Measure Product Y Product Z
Machine-hours 10,000 2,000
Number of setups 40 60
Number of products 1 1
Direct labor-hours 7,000 7,400
1. What is the company's plantwide overhead rate? (Round your answer to 2 decimal places.)
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. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?