Question

Required information

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:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost			Expected Activity
Machining	Machine-hours	$	198,000			10,000	MHs
Machine setups	Number of setups	$	86,400			180	setups
Production design	Number of products	$	82,000			2	products
General factory	Direct labor-hours	$	248,000			10,000	DLHs

Activity Measure	Product Y			Product Z
Machining		7,800			2,200
Number of setups		50			130
Number of products		1			1
Direct labor-hours		7,800			2,200

5. What is the activity rate for the Product Design activity cost pool?

6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places. Round your answers to the nearest dollar amount.)

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to the nearest dollar amount.)

Answer 1

5) Product design activity rate = 82000/2 = 41000 per product

6) General factory activity = 248000/10000 = 24.80 per hour

9) Total manufacturing overhead assigned to product Y

	Product Y
Machining	154440
Machine setup	24000
Product design	41000
General factory	193440
Total overhead	412880

10) Total manufacturing overhead assigned to product Z

	Product Z
Machining	43560
Machine setup	62400
Product design	41000
General factory	54560
Total overhead	201520