Question

not indicate completion. Return to question Required information 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 Machining Machine setups Production design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 203,000 $ 121,900 $ 87,000 $ 379,5e8 Expected Activity 10,000 MHS 230 setups 2 products 15,000 DLHs Activity Measure Machining Number of setups Number of products Direct labor-hours Product Y 3,300 50 1 9,5eo Product z 1,709 180 1 5,500 11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Product Y 501,220 00 % Total overhead cost Productz 290,180,00 %

Answer 1

Total estimated overheads = Machinery overheads + Machine setup overheads+ Production design overheads + General factory overheads

= 203,000+121,900+87,000+379,500

= $791,400

Estimated direct labor hours = 15,000

Predetermined overhead rate =  Total estimated overheads/ Estimated direct labor hours

= 791,400/15,000

= $52.76 per direct labor hours

Overhead applied to Product Y = Direct labor hours used for Product Y x  Predetermined overhead rate

= 9,500 x 52.76

= $501,220

Overhead applied to Product Z = Direct labor hours used for Product Z x  Predetermined overhead rate

= 5,500 x 52.76

= $290,180

Percentage of total overhead cost allocated to Product Y = Overhead applied to Product Y/ Total estimated overheads

= 501,220/791,440

= 63.33%

Percentage of total overhead cost allocated to Product Z = Overhead applied to Product Z/ Total estimated overheads

= 290,180/791,440

= 36.67%

	Product Y	Product Z
Total overhead cost	63.33%	36.67%

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