Question

Required information Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 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 $ 227,700 $ 153,900 $ 91,000 $ 257,000 Expected Activity 11,000 MHS 270 setups 2 products 10,000 DLHS Activity Measure Machining Number of setups Number of products Direct labor-hours Product Y 8,700 60 1 8,700 Product Z 2,300 210 1,300 10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to the nearest dollar amount.) Total manufacturing overhead cost

Answer 1

Activity cost pool	Activity measure	Estimated overhead cost	Expected activity	Activity rate	Activity used by product Z	Overhead allocated to product Z
Machining	Machine hours	227,700	11,000 MHs	227,700/11,000 = $20.7	2,300	2,300 x 20.7 = 47,610
Machine setups	Number of setups	153,900	270 setups	153,900/270 = $570	210	210 x 570 = 119,700
Production design	Number of products	91,000	2 products	91,000/2 = $45,500	1	45,500 x 1 = 45,500
General factory	Direct labor hours	257,000	10,000 DLHs	257,000/10,000 = $25.7	1,300	1,300 x 25.7 = 33,410
Total						$246,220

Total manufacturing overhead cost allocated to product Z = $246,220

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