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Hickory 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 implementi
Hickory 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 PoolActivity MeasureEstimated Overhead CostExpected Activity
Machining Machine-hours$213,400 11,000 MHs
Machine setups Number of setups$61,600 140 setups
Production design Number of products$78,000 2 products
General factory Direct labor-hours$244,000 13,200 DLHs
Activity MeasureProduct YProduct Z
Machine-hours6,400 4,600
Number of setups60 80
Number of products1 1
Direct labor-hours7,400 5,800
What is the company’s plant-wide overhead rate?
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- 165 orders completed
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************** Wide Overhead **** * ********* ************* overhead **** * ********* direct ***** ************* ************* ********* * ******** ****** * ******* $244000Estimate ************* Overheads = **************** direct ***** hours * 7400 * 5800Estimated ****** Labor ***** * ***** hoursPlant **** ******** Rate = ****** * ****** *******
