Hickory Company manufactures two products—15,000 units of Product Y and 7,000 un

Question

Hickory 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: (The total estimated overhead cost may not agree with the sum of allocated overhead costs to each product.) Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 213,400 11,000 MHs Machine setups Number of setups $ 61,600 140 setups Production design Number of products $ 78,000 2 products General factory Direct labor-hours $ 244,000 10,000 DLHs Activity Measure Product Y Product Z Machining 6,400 4,600 Number of setups 60 80 Number of products 1 1 Direct labor-hours 7,400 2,600 Required: 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.) Product Y Product Z Manufacturing overhead % %

Explanation / Answer

Particulars Amount (in $) Total Product Y Product Z Estimated Overhead Cost 213400.00 Machine setups 61600.00 Production design 78000.00 Total Overhead Cost 353000.00 261220.00 91780.00 Overhead Cost allocated based on Direct Labour Hours

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