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. Using the ABC system what percentage of Product Design cost is assigned to Product Y and Product Z? round your answer to 2 decimal places

Essmated Acty Measure Mechine-hours Co Expected Acheity 231000 oco MH Acivtty Cot Pool 180000 setup 300 setups Number of "tipi Nmber of sap Number of products ne semups 2 producta Production design Generel fsctory Product YProduct z 3,000 2-40 Machining Number of Number ot products serups

Explanation / Answer

PRODUCT DISIGN EASTIMETED OVERHEAD COST = $94000

PRODUCT DESIGN COST POOL (2 PRODUCTS) = 2

PRODUCT DESIGN COST PER PRODUCT ($94000 / 2) = $47000

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NUMBER OF PRODUCTS FOR PRODUCT Y = 1

PRODUCT DESIGN OVERHEAD COST FOR PRODUCT Y ($47000 * 1) =$47000

%OF PRODUCT DESIGN COST ALLOCATED TO PRODUCT Y ($47000 / $94000) *100 = 50%

NUMBER OF PRODUCTS FOR PRODUCT Z = 1

PRODUCT DESIGN OVERHEAD COST FOR PRODUCT Z ($47000 * 1) =$47000

%OF PRODUCT DESIGN COST ALLOCATED TO PRODUCT Z ($47000 / $94000) *100 = 50%

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