Question

Required information Greenwood Company manufactures two products-15,000 units of Product Y and 7,000 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 Estimated Overhead Cost s 221,100 Expected ActivitY Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products 85, 000 11,000 MHs 107,100 210 setups 2 products Direct labor-hours 251,000 10, 000 DLHs Product Y Product 2 Activity Measure Machining Number of setups Number of products Direct labor-hours 2,900 8,100 50 1 8,100 1 1,900 4. What is the activity rate for the Machine Setups activity cost pool? per setup y rate

Answer 1

Answer = 1
Step 1: Calculation of the Activity Cost Driver Rate
Activity Cost Driver Rate = Activity Cost / Cost Driver
							Estimated Overhead Rate / Esestimated Activityu
Activity	Cost Driver		Estimated Overhead Cost	"/"	Expected Actovity	" = " To	Cost Driver Rate
Machining	Machine Hours		$                     2,21,100	"/"	11,000	" = " To	20.10
Machiene Setups	Number of Setups		$                     1,07,100	"/"	210	" = " To	510.00
Prodction Design	Number of Produce		$                         85,000	"/"	2	" = " To	42,500.00
General Factory	Direct Labour Hours		$                     2,51,000	"/"	10,000	" = " To	25.10
Answer =
Activity rate of Gerearal Factory Activity Cost Pool = $ 25.10 Per DLH