Question

Hickory 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 $614,400 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: Estimated Expected Overhead Cost Activity $ 198,000 10,000 MHs $ a 86,400 18° setups Activity Cost Activity Pool Measure Machining Machine-hours Machine setups Number of Number of Product design General Direct labor- bor- factory hours $ products 82,000 2 products 24 248,000 12,000 DLHS $ Product Product 6,800 50 3,200 130 Activity Measure Machine-hours Number of setups Number of products Direct labor hours 1 7,800 4,200

4)

5)

6)

Answer 1

activity rate = estimated cost / expected activity.

4.machine set up activity cost pool.

=>$86,400/180 setups

=>$480.

5.product activity design activity cost pool:

=>$82,000 / 2

=>$41,000 per product.

6.general factory activity:

$248,000 / 12,000

=>$20.67.

7.A.machine setups activity.

Machine setup is a batch level activity.