Greenwood Company manufactures two products - 15,000 units of Product Y and 7,00

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 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 factory cost is assigned to Product Y and Product Z! Round your answers to 2 decimal places

Overhend Activity Cost PoolActhvity Mensure Machining Mochine setups Production design Genarel fectory Machine-hours Number of setups Number of producta Direct labor-hours Cot Expected Actiw s 231000 1,000 MHs $ 190 000 300 serupe 94.000 200,000 10,000 DU 2 product Actity Measure Product Y Machining Number of setups Number of producs Oirect lnbor-hours 8.000 3.000 9000

Explanation / Answer

Answer : Factory cost assigned To prodcut Y & Z in percentage

Product Y Product Z Activity Cost Pool Overhead Cost Expected Activities Activity Rate Expected Activity Amount Expected Activity Amount A B C = A/B D E = D*C F G= F*C Machining 231000 11000 21 8000 168000 3000 63000 Machine Setups 180000 300 600 60 36000 240 144000 Product Design 94000 2 47000 1 47000 1 47000 General Factory 200000 10000 20 9000 180000 1000 20000 Total 705000 431000 274000 Factory cost assigned in percentage to Product Y & Z For Product Y 431000/705000*100 61.13% For Product Z '274000/705000*100 38.87% Total 100.00%

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