Reference no: EM132580996
Hickory 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 $745,200 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:
Activity Cost Pool Activity Measure Estimated Overhead Cost Expected
Activity Machining Machine-hours $242,400 12,000 MHs
Machine setups Number of setups $114,400 220 setups
Product design Number of products $86,000 2 products
General factory Direct labor-hours $302,400 14,400 DLHs
Activity Measure Product Y Product Z
Machine-hours 7,200 4,800
Number of setups 40 180
Number of products 1 1
Direct labor-hours 8,200 6,200
Question 1: Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?
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