Question

Required information The Foundational 15 [L07-1, LO73, LO74) The following information applies to the questions displayed below. Part 1 of4 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 $729,000 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: polnts Estimated Overhead Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Cost Expected Activity $ 231,600 12,000 MHs $ 55,900 $77,000 $364,500 14,400 DLHs eBook 130 setups 2 products Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Product Y Product Z 6,300 40 5, 700 90 9,000 5,480

1. What is the company’s plantwide overhead rate? (Round your answer to 2 decimal places.)

2. What is the activity rate for the Machining activity cost pool?

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

4. Which of the four activities is a batch-level activity?

A. Machining activity
B. Machine setups activity
C. Product design activity
D. General factory activity

Answer 1

1
Estimated overhead cost	729000
Divide by Estimated DLHs	14400
Plantwide overhead rate	50.63	per DLH
2
	Machining
Estimated overhead cost	231600
Divide by Estimated MHs	12000
Activity rate for the Machining activity	19.30	per MH
3
	Product design
Estimated overhead cost	77000
Divide by Estimated products	2
Activity rate for the Product Design activity	38500	per product
4
Machine setups activity is a batch-level activity
Option B is correct