Question

Required information Greenwood Co 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 mpany manufactures two products 15,000 units of Product Y and 7000 units of Product Z. The company Estimat ed Overhead Expected Activity Activity Cost Poo1 Activity Measur Machining Machine setups Production design Number of products General factory Cost s221,100 s 107,100 85, 000 11,000 MHs Machine-hours Number of setups 210 setups 2 products Direct labor-hours 251,000 10,000 DLH Product Y Produet 2 Activity Measure Machining Number or setupa Number of products Direct 1abor-hours 8,100 50 2,900 160 8, 100 1,900 3. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.) per MH Iivity rate

Answer 1

Total Cost of Machining = $221,100

Expected activity = 11,000 Machine Hours

Activity Rate = Total Overhead Cost/Expected Level of Activity

= $221,100/11,000

= $20.1 per Machine Hour