Using the plantwide overhead rate, what percentage of the total overhead cost is

Question

Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

Hickory Company manufactures two products-14,000 units of Product Y and 6,000 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 $705,600 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: Estimated Overhead Expected Activity Activity Cost Pool Machining Machine setups Product design General factory Activity Measu Machine-hours Number of setups Number of products Direct labor-hours re Cost $ 192,000 10,000 MHs $ 50,400 76,000 120 setups 2 products 387,200 12,000 DLHs Activity Measure Product YProduct z Machine-hours Number of setups Number of products Direct labor-hours 3,800 70 1 2,000 6,200 50 10,000

Explanation / Answer

Percentage of the total overhead cost: Product Y 83.33% =10000/(10000+2000) Product Z 16.67% =2000/(10000+2000)

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