Required information Greenwood Company manufactures two products-14,000 units of

Question

Required information 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 CostActivity Pool Estimated Expected Activity Measure Overhead Cost $206, 000 s 145, 600 Machine- hours Machining 10, 000 MHs Machine setups setups Number of 260 setups Production design General factory Number of products Direct labor-hours 90,000 2 products s 307,200 12,000 DLHS Activity MeasureProduct Y Product z Machining Number of setups Number of products Direct labor-hours 8, 600 50 1,400 210 8, 600 3, 400 4. What is the activity rate for the Machine Setups activity cost pool? per setup

Explanation / Answer

Machine setups Activity cost pool estimated overhead cost/machine setups 145,600/260 560 Activity rate 560 per setup

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