Greenwood Company manufactures two products 13,000 units of Product Y and 5,000
ID: 2343194 • 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 $ 249,600 s 162,400 $ 92,000 $ 309,600 Expected Activity Activity cost Poo] Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours 12,000 MHs 280 setups 2 products 12,000 DLHs Activity Measure Machining Number of setups Number of products Direct labor-hours Product Y 8,800 Product Z 3,200 40 240 8,800 3,200 15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your intermediate calculations and final answers to 2 decimal places.) Product Y Product Z General factory costExplanation / Answer
Computation of General factory cost percentage assigned to product Y and product Z :
General factory overhead is assigned to Product Y and product Z on the basis of Direct labor hours (DLHs) and total direct labor hours available is 12000.
Total direct labor hours available = 12000.
Direct labour hours required in product Y = 8800
Direct labour hours required in product Z = 3200
Percentage of General factory cost of product Y =
(Direct labour hour required in product Y /Total direct labor hours)*100
= (8800/12000)*100 = 73.33%
Percentage of General factory cost of product Z =
(Direct labour hour required in product Z /Total direct labor hours) *100
= (3200/12000)*100 = 26.67%
Product Y
Product Z
General factory cost
73.33
%
26.67
%
Product Y
Product Z
General factory cost
73.33
%
26.67
%
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