Question

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	$	209,000			10,000	MHs
Machine setups	Number of setups	$	171,100			290	setups
Production design	Number of products	$	93,000			2	products
General factory	Direct labor-hours	$	259,000			10,000	DLHs

Activity Measure	Product Y			Product Z
Machining		8,900			1,100
Number of setups		50			240
Number of products		1			1
Direct labor-hours		8,900			1,100

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

What is the activity rate for the General Factory activity cost pool?

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?

Answer 1

Greenwood Company Activity What is the activity rate for the Product Design activity cost pool? Estimated Expected Activity Cost Pool Machining Overhead Cost Activity Rate Activity rate = Estimated Overhead Cost / Expected Activity 10000 MH's 209000 20.9 per MH = 93000 / 2 Machine setups 290 setups 171100 590 per setup Production design per product 2 products = 46500 93000 46500 General factory 259000 10000 DLHS 25.9 per DLH What is the activity rate for the General Factory activity cost pool? 732100 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? Activity rate = Estimated Overhead Cost / Expected Activity = 259000 / 10000 Activity Activity Measure Machining Product Y Activity Total Cost = 25.9 Rate 8900 20.9 186010 per MH Number of setups 50 590 per setup 29500 Number of products 46500 per product 46500 1 Direct labor-hours per DLH 8900 25.9 230510 492520 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? Activity Product Z Activity Activity Measure Total Cost Rate Machining 1100 20.9 22990 per MH Number of setups 240 per setup 590 141600 Number of products 46500 per product 46500 Direct labor-hours 28490 1100 25.9 per DLH 239580

Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? The plantwide overhead rate is computed as follows: Total estimated overhead cost (a) 732100 Total expected direct labor-hours (b) Predetermined overhead rate (a) + (b) DLH's 10000 73.21 per DLH The overhead cost assignments to Products Y and Z are as follows: Product Y Product Z Total direct labor hours (a) 8900 Plantwide overhead rate per DLH (b) 73.21 73.21 Manufacturing overhead assigned (a) x (b) 651569 80531 Product Y Product Z Plantwide Approach Amount Amount Total Manufacturing overhead 651569 89.00% 80531 11.00% 732100 Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? Estimated Expected Activity Overhead Cost Activity Rate Machining activity cost pool 209000 10000 МН 20.9 per MH Product Y Product Z Activity Amount Activity Amount Machining, at $20.90 per machine-hour 8900 1100 186010 22990 Activity-Based Costing System Product Y Product Z Total Amount Amount 89.00% Machining 11.00% 186010 22990 209000

Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? Estimated Expected Activity Overhead Cost Activity Rate Machine setups activity cost pool 171100 290 МН 590 per setup Product Y Product Z Activity Amount Activity Amount Machine setups, at $590 per setup 29500 50 240 141600 Activity-Based Costing System Product Y Product Z Amount Total Amount Machine setups 82.76% 17.24% 141600 29500 171100 Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? Estimated Expected Activity Overhead Cost Activity Rate Product design activity cost pool 93000 2 МН 46500 per setup Product Y Product Z Activity Activity Amount Amount Product design, at $46,500 per product 46500 46500 Activity-Based Costing System Product Y Product Z Total Amount Amount Product design 46500 50.00% 50.00% 93000 46500 Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? Estimated Expected Activity Overhead Cost Activity Rate General factory activity cost pool 259000 10000 DLH 25.9 per DLH Product Y Product Z Activity Amount Activity Amount General factory, at $25.90 per direct labo 28490 8900 230510 1100 Activity-Based Costing System Product Y Product Z Total Amount Amount General factory 11.00% 89.00% 28490 259000 230510