11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?
Product Y | Product Z | |||
Manufacturing overhead | 61.36 | % | 38.64 | % |
The plantwide overhead rate is based on direct labor-hours. Therefore, total manufacturing overheads are allocated to Product Y and Product Z based on the direct labor-hours used by them.
Activity | Estimated cost |
Machining | $ 221,100 |
Machine setups | $ 107,100 |
Product design | $ 85,000 |
Geenral factory | $ 251,000 |
TOTAL MANUFACTURING OVERHEAD (A) | $ 664,200 |
TOTAL DIRECT LABOR HOURS (B) | 13,200 |
OVERHEAD RATE (A) ÷ (B) | $ 50.3182 |
Product Y | Product Z | Total | |
Direct labor-hours used (A) | 8,100 | 5,100 | 13,200 |
Overhead rate (plant wide based on direct labor hours (B) | $ 50.3182 | $ 50.3182 | |
Allocated Manufacturing overhead (A) × (B) | $ 4,07,577.27 | $ 2,56,622.73 | $ 6,64,200.00 |
Percentage to total Manufacturing overhead | 61.36% | 38.64% | 100.00% |
EXTRA - Manufacturing overhead allocation based on ABC
Activity cost pool | Estimated overhead cost (A) | Activity measure | Expected activity (B) | Cost allocation rate (A) ÷ (B) |
Machining | $ 2,21,100 | Machine-hours | 11,000 MHs | $ 20.10 |
Machine setups | $ 1,07,100 | Number of setups | 210 setups | $ 510.00 |
Product design | $ 85,000 | Number of products | 2 products | $ 42,500.00 |
General factory | $ 2,51,000 | Direct labor-hours | 13,200 DLHs | $ 19.0152 |
$ 6,64,200 |
Activity | Product Y | Product Z | Total |
Machining | |||
Cost allocation rate (i) | $ 20.10 | $ 20.10 | |
Machine hours (ii) | 7,100 | 3,900 | 11,000 |
Total Machining costs (i) × (ii) | $ 142,710.00 | $ 78,390.00 | $ 221,100.00 |
Machine setups | |||
Cost allocation rate | $ 510.00 | $ 510.00 | |
Number of setups | 60 | 150 | 210 |
Total Machine setup costs | $ 30,600.00 | $ 76,500.00 | $ 107,100.00 |
Product design | |||
Cost allocation rate | $ 42,500.00 | $ 42,500.00 | |
Number of products | 1 | 1 | 2 |
Total Product design costs | $ 42,500.00 | $ 42,500.00 | $ 85,000.00 |
General factory | |||
Cost allocation rate | $ 19.0152 | $ 19.0152 | |
Direct labor-hours | 8,100 | 5,100 | 13,200 |
Total General factory costs | $ 154,023.12 | $ 96,977.52 | $ 251,000.64 |
Total Allocated Manufacturing costs | $ 369,833.12 | $ 294,367.52 | $ 664,200.64 |
Notes:
Hickory Company manufactures two products-15,000 units of Product Y and 7,000 units of Product Z. The...
Hickory 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 $571,200 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...
Hickory 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: (The total estimated overhead cost may not agree with the sum of allocated overhead costs to...
Hickory 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 2. (The total estimated overhead cost may not agree with the sum of allocated overhead costs to...
Hickory 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 $674,000 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: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 216,700 11,000...
Hickory 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 $674,000 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: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 216,700 11,000...
Hickory 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 $674,000 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: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 216,700 11,000...
Hickory 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 $674,000 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: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 216,700 11,000...
Hickory 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. (The total estimated overhead cost may not agree with the sum of allocated overhead costs to...
Hickory company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z.... -7 Homework 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 $791,400 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y...
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