Greenwood Company manufactures two products-15,000 units of Product Y and 7,000
ID: 2425767 • Letter: G
Question
Greenwood Company manufactures two products-15,000 units of Product Y and 7,000 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 Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Cost Expected Activity $ 216,700 ,000 MHs $ 79,900 $ 81,000 $ 247000 0,000 DLHs 170 setups 2 products Activity Measure Product Y Product Z 6,700 4,300 110 Machining Number of setups Number of products Direct labor-hours 60 7,700 2,300Explanation / Answer
Cost per activity
Cost per machine hour= 216,700/11,000= $19.7 per hour
Cost per setup=79,900/170=$470 per setup
Cost per production design=81,000/2= $40,500
Cost per direct labour hour= 247,000/10,000=$24.7
11.
Particulars
Product Y
Product Z
Machining-19.7 per hour
6700*19.7=131,990
84,710
Machine setups-470 per setup
60*470=28,200
110*470=51,700
Production Design-40,700
40,700
40,700
Direct labor hours
7,700*24.7=190,190
2,300*24.7=56,810
Total
3,91,080
233920
Total Overheads= $625,000
% of overhead for product Y= 391080/625000=62.57%
% of overhead for product Z= 233920/625000= 37.43%
12. % of Machining cost
Total machining cost= 216700
% to Product Y= 131990/216700*100= 60.91%
% to Product Z= 84710/216700*100= 39.09%
13. Total Machine setup cost= 79900
% to Product Y= 28200/79900*100= 35.29%
% to Product Z= 64.71%
14. Total product design cost
% to product Y=40500/81000*100=50%
% to product Z= 50%
15. Total General Factory cost= 247000
% to product Y=190190/247000*100=77%
% of product Z= 56810/247000*100=23%
Particulars
Product Y
Product Z
Machining-19.7 per hour
6700*19.7=131,990
84,710
Machine setups-470 per setup
60*470=28,200
110*470=51,700
Production Design-40,700
40,700
40,700
Direct labor hours
7,700*24.7=190,190
2,300*24.7=56,810
Total
3,91,080
233920
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