- Exercise 1 Ch7 Abc Hickory Company Manufactures Two Products 14 000 Units Of Product Y And 6 000 Units Of Product Z 1 (77.88 KiB) Viewed 10 times
Exercise 1: (Ch7 ABC) 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 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: Activity Cost Pool Machining...... Machine setups Product design. General factory Activity Measure Machine-hours.... Number of setups Number of products Direct labor-hours ***** ***** Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $200,000 $100,000 $84,000 $300,000 Product Y Product Z 7,000 3,000 50 150 1 1 8,000 4,000 Expected Activity 10,000 MHS 200 setups 2 products 12,000 DLHS Required: 1. What is the
company's plantwide (traditional) overhead rate? 2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y? How much is allocated to Product Z? 3. If the
company shift to use ABC. How much manufacturing overhead cost is allocated to Product Y? How much is allocated to Product Z?