Greenwood Company manufactures two products—13,000 units of Product Y and 5,000

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:

Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z

Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?

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:

Explanation / Answer

percentage of the Machining costs is assigned to Product Y and Product Z are as follows :

X = (7500/12000)*100 = 62.5%

Y = 37.5%

percentage of the Product Design cost is assigned to Product Y and Product Z are as follows :

X = (1/2) of Prodcuts = 50%

Y = 50%

percentage of the General Factory cost is assigned to Product Y and Product Z are as follows :

= X = (8500/14000)*100 = 60.71%

= Y = (5500/14000)*100 = 39.29%

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