Question

Hickory Company manufactures two products-13,000 units of Product Y and 5,000 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 each product.) Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 249,600 $ 162,400 $ 92,000 $ 309,600 Expected Activity 12,000 MHs 280 setups 2 products 12,000 DLHS Activity Measure Machining Number of setups Number of products Direct labor-hours Product Y Product Z 7,800 4,200 40 240 8,800 3,200 Required: Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.) Total manufacturing overhead cost

Answer 1

Machining (249,600/12,000)*7,800	162,240
Setups (162,400/280)*40	23,200
Production design (92,000/2)*1	46,000
General (309,600/12,000)*8800	227,040
Total Overhead applied to product Y	458,480

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