[The following information applies to the questions displayed below.] Hickory Co

Question

[The following information applies to the questions displayed below.]

Hickory 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 $684,000 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:

2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z?

Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 200,000 10,000 MHs Machine setups Number of setups $ 100,000 200 setups Product design Number of products $ 84,000 2 products General factory Direct labor-hours $ 300,000 12,000 DLHs

Explanation / Answer

Plantwide overhead rate = 684000/12000 = 57 per labour hour

Product Y = 8000*57 = 456000

Product Z = 4000*57 = 228000

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.