Business, 12.03.2020 18:00 20009

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 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 $249,600 12,000 MHs
Machine setups Number of setups $162,400 280 setups
Production design Number of products $92,000 2 products
General factory Direct labor-hours $309,600 14,400 DLHs

Activity Measure Product Y Product Z
Machine-hours 7,800 4,200
Number of setups 40 240
Number of products 1 1
Direct labor-hours 8,800 5,600

Required:
a. What is the activity rate for the Product Design activity cost pool?
b. What is the activity rate for the General Factory activity cost pool?
c. Which of the four activities is a batch-level activity?

i. Machine setups activity
ii. General factory activity
iii. Machining activity
iv. Product design activity

Answers: 1

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Hickory Company manufactures two products—13,000 units of Product Y and 5,000 units of Product Z. Th...

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