Greenwood Company manufactures two products—14,000 units of Product Y and 6,000

Question

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:

  

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

The total for Product Y is $352,280 and Product Z it is $353,320. I am getting the percentages at 49.93 and 50.07 and it is saying that is wrong.

Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity   Machining Machine-hours $ 192,000    10,000 MHs   Machine setups Number of setups $ 50,400    120 setups   Production design Number of products $ 76,000    2 products   General factory Direct labor-hours $ 387,200    16,000 DLHs

Explanation / Answer

Calculate percentage of the total overhead cosst allocated to product Y and product Z :

Product Y Product Z Overhead percentage 7200*100/16000 = 45% 8800*100/16000 = 55%

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