Greenwood Company manufactures two products-14,000 units of Product Y and 6,000
ID: 2343087 • Letter: G
Question
Greenwood Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwid (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 e overhead rate based on direct labor-hours. It is considering implementing an activity-based costing Estimated Overhead tivity Cost Pool Expected Machining Machine setups Production design Number of products 84,000 General factory Activity Measu Machine-hours Cost 200,000 10,000 MHs 100,000 Number of setups 200 setups 2 products Direct labor-hours 300,000 12,000 DLHs tivity Measure Machining Number of setups Number of products Direct labor-hours Product 8,000 40 2,000 260 9,000 3,000 2. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? & Answer is complete but not entirely correct. Product 2z Product Y 45 % 55 % costExplanation / Answer
Answer
Product Y = 8,000 machine hours x $ 20 = $ 160,000
Product Z = 2,000 machine hours x $ 20 = $ 40,000
Product Y
Product Z
Machining Cost
= ($160,000/$200,000) x 100 = 80%
= ($40,000/$200,000) x 100 = 20%
Product Y
Product Z
Machining Cost
= ($160,000/$200,000) x 100 = 80%
= ($40,000/$200,000) x 100 = 20%
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