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. What is the activity rate for the Machining activity cost pool? round 2 decimal places.

Machining Machine sesups Phoduction design eneral factory 231,000 11,000 MHa 180000300 300 seips Number of setups Number of products Dvect lebor hours 04,000 2 products $200.000 10,000 DHE Machining Number of stpe Number of producta 8,000 3.000 50240 9000 1000

Explanation / Answer

Activity Rate for Machining Activity Cost Pool = Estimated Overhead Cost / Expected Activity = 231,000 / 11,000 = $21 per machine hour

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