Greenwood Company manufactures two products—14,000 units of Product Y and 6,000
ID: 2562899 • Letter: G
Question
Greenwood 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 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:
1. What is the company’s plantwide overhead rate? (Round your answer to 2 decimal places.) _______per DLH
2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) Product Y______ Product Z_______
3. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.) Activity Rate ________ per MH
4. What is the activity rate for the Machine Setups activity cost pool? (Round your answer to 2 decimal places.) Activity Rate ______ per set up
5. What is the activity rate for the Product Design activity cost pool? (Round your answer to 2 decimal places.)
Activity Rate ______ per product
Greenwood 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 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:
Explanation / Answer
1) Plantwide overhead rate = Estimated Total overhead/Estimated total labour hour
= 748800/12000
Plantwide overhead rate = 62.40 per labour hour
2) Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z
Product Y = 8600*62.40=536640
Product Z = 3400*62.40 = 212160
3)What is the activity rate for the Machining activity cost pool
activity rate = Machining cost/no of machine hour = 206000/10000 = 20.60 per machine hour
4. What is the activity rate for the Machine Setups activity cost pool
Activity rate = Setup cost/no of setup = 145600/260 = 560 per setup
5. What is the activity rate for the Product Design activity cost pool?
Activity rate = Product design cost/No of product = 90000/2=45000 per product
3)
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