Greenwood Company manufactures two products-13,000 units of Product Y and 5,000
ID: 2343193 • Letter: G
Question
Greenwood 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: Estimated Overhead Cost Expected Activity Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours 249,600 12,000 MHs $ 162,400 $ 92,000 280 setups 2 products 309,600 12,000 DLHs Activity Measure Machining Number of setups Number of products Direct labor-hours Product Y 8,800 Product Z 3,200 240 1 3,200 40 8,800 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.) Product Y Product Z Product design costExplanation / Answer
Answer
Product Y
Product Z
Product Design cost
50.00%
50.00%
Total Design cost = $92,000
Estimated activity (number of products) = 2
Cost per Activity ($92000/2)= $46,000
Since Product Y and Z both are only two products designed. Product design cost assigned to product y and z will be equal. Both the products will absorb design cost of $46,000 each that is in share of 50:50.
Product Y
Product Z
Product Design cost
50.00%
50.00%
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