Greenwood Company manufactures two products—13,000 units of Product Y and 5,000
ID: 2395913 • Letter: G
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:
Activity Cost Pool
Activity Measure
Estimated Overhead Cost
Expected Activity
Machining
Machine-hours
$
249,600
12,000
MHs
Machine setups
Number of setups
$
162,400
280
setups
Production design
Number of products
$
92,000
2
products
General factory
Direct labor-hours
$
309,600
12,000
DLHs
Activity Measure
Product Y
Product Z
Machining
7,800
4,200
Number of setups
40
240
Number of products
1
1
Direct labor-hours
8,800
3,200
1.
What is the company’s plantwide overhead rate? (Round your answer to 2 decimal places.)
Predetermined overhead rate_____ per DLH
2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Manufacturing overhead allocated: Product Y _______ Product Z____________
3. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.)
Activity rate________ per MH
4. What is the activity rate for the Machine Setups activity cost pool? (Round your answer to 2 decimal places.)
Activity rate _______ per set up
5. What is the activity rate for the Product Design activity cost pool? (Round your answer to 2 decimal places.)
Activity rate ________ per set up
6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)
Activity rate _________ per DHL
7. Which of the four activities is a batch-level activity?
a. Machining activity
b. General factory activity
c. Product design activity
d. Machine setups activity
8. Which of the four activities is a product-level activity?
a. General factory activity
b. Product design activity
c. Machining activity
d. Machine setups
9.
Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)
Total Manufacturing overhead costs:_______
10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)
Total Manufacturing overhead costs__________
11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your answers to 2 decimal places.)
Total Overhead costs: Product Y _____ % Product Z_____%
12.
Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)
Machine costs Product Y ____% Product Z_____%
13.
Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)
Machine set up costs: Product Y _____% Product Z ____%
14.
Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)
Product design cost: Product Y ______% Product Z _____%
15 Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)
General Factory Costs: Product Y _____% 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
1 Predetermined overhead rate=Total estimated overhead cost/Expected direct labor hours Total estimated overhead cost: Machining 249600 Machine setups 162400 Production design 92000 General factory 309600 Total 813600 Expected direct labor hours=12000 hours Predetermined overhead rate=813600/12000=$67.8 per DLH 2 Manufacturing overhead allocated=Direct labor hours in the department*Predetermined overhead rate Product Y=8800*67.8=$596640 Product Z=3200*67.8=$216960 Activity rate=Estimated Overhead Cost/Expected Activity 3 For Machining,Activity rate=249600/12000=$20.8 per MH 4 For Machine setups,Activity rate=162400/280=$580 per setup 5 For production design,Activity rate=92000/2=$46000 per product 6 For gheneral factory,Activity rate=309600/12000=$25.8 per DLH 7 d. Machine setups activity 8 b. Product design activity 9 Overhead allocated=Expected activity for the product*Activity rate Y Machining 7800*20.8 162240 Machine setups 40*580 23200 Production design 1*46000 46000 General factory 8800*25.8 227040 458480 10 Overhead allocated=Expected activity for the product*Activity rate Z Machining 4200*20.8 87360 Machine setups 240*580 139200 Production design 1*46000 46000 General factory 3200*25.8 82560 355120 11 Y Z Total Overhead allocated 596640 216960 813600 Precentage 73.33% 26.67% Y Z Total 12 Machining 162240 87360 249600 Percentage 65.00% 35.00% 13 Machine setups 23200 139200 162400 Percentage 14.29% 85.71% 14 Production design 46000 46000 92000 Percentage 50.00% 50.00% 15 General factory 227040 82560 309600 Percentage 73.33% 26.67%
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