Hickory Company manufactures two products-14.000 units of Product Y and 6,000 un

Question

Hickory Company manufactures two products-14.000 units of Product Y and 6,000 units of Product 2. 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.) Required: Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z?

Explanation / Answer

P-x P-y Machining 195000 *65/100 = 126750 *35/100 =68250 Machine setups 67500 *50/150 = 22500 * 100/150 = 45000 Production design 79000 *50% =39500 * 50% =39500 General Factory 245000 *75/100 =183750 * 25/100 =61250 Manufacturing overhead allocated $372500 $214000

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