Answer:
Greenwood Company
1. Company's plantwide overhead rate = $57
2. Allocation of Manufacturing overhead based on plantwide overhead rate:
Product Y = $57 * 9,000 = $513,000
Product Z = $57 * 3,000 = $171,000
3. Activity rate for the Machining activity cost pool = $20 per MHs.
4. Activity rate for the Machine Setups activity cost pool = $500 per setup.
5. Activity rate for the product Design activity cost pool = $42,000 per product.
6. Activity rate for the General Factory activity cost pool = $25
7. The batch-level activity = Machine setup
8. The product-level activity = Product Design
9. Using the ABC system, Manufacturing overhead cost assigned to Product Y = $447,000
10. Using the ABC system, Manufacturing overhead cost assigned to Product Z = $237,000
11. Using the plantwide overhead rate, the percentage of the total overhead costs allocated to product Y and Product Z is:
Product Y = 75% ($513,000/$684,000 * 100)
Product Z = 25% ($171,000/$684,000 * 100)
12. Using the ABC system, the percentage of the Machining costs assigned to Product Y and Product Z is:
Product Y = 80% ($160,000/$200,000 * 100)
Product Z = 20% ($40,000/$200,000 * 100)
13. Using the ABC system, the percentage of the Machine Setups cost assigned to Product Y and Product Z is:
Product Y = 20% ($20,000/$100,000 * 100)
Product Z = 80% ($80,000/$100,000 * 100)
14. Using the ABC system, what percentage of the product design cost assigned to Product Y and Product Z is:
Product Y = 50% ($42,000/$84,000 * 100)
Product Z = 50% ($42,000/$84,000 * 100)
15. Using the ABC system, what percentage of the General Factory cost assigned to Product Y and Product Z is:
Product Y = 75% ($225,000/$300,000 * 100)
Product Z = 25% ($75,000/$300,000 * 100)
Explanation:
a) Data and Calculations:
Activity Cost Activity Measure Estimated Expected
Pool Overhead Cost Activity
Machining Machine-hours $200,000 10,000 MHs
Machine setups Number of setups $100,000 200 setups
Production design Number of products $84,000 2 products
General factory Direct labor-hours $300,000 12,000 DLHs
Total $684,000
Activity Measure Product Y Product Z
Units produced 14,000 6,000
Machining 8,000 2,000
Number of setups 40 160
Number of products 1 1
Direct labor-hours 9,000 3,000
Plantwide overhead rate = Total overhead costs/direct labor-hours
= $684,000/12,000 = $57 per DLHs
Overhead Rate =
Machining $20 ($200,000/10,000) per MHs
Machine setup $500 ($100,000/200) per setup
Production design $42,000 ($84,000/2) per product
General factory $25 ($300,000/12,000) per DLHs
Assignment of Manufacturing Overhead:
Product Y Product Z Total Product Y Product Z
Machining $160,000 $40,000 $200,000 80% 20%
Machine setup 20,000 80,000 100,000 20% 80%
Production design 42,000 42,000 84,000 50% 50%
General factory 225,000 75,000 300,000 75% 25%
Total overhead $447,000 $237,000 $684,000
