Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below 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 $684,000 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 s 200,000 10,000 MHs s 100,000 7,000 50 3,000 Number of setups Direct labor-hours 8,0004,000 11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product

Explanation / Answer

The overhead rate using plantwide rate
=total cost/direct labour hours
=684000/300000=2.28
Product Y:
Mfg overhead=2.28*8000=18240
Product Z:
=2.28*4000=9120

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