ACG2071 - Chapter 4: Activity-based Costing

(True/False): Traditional cost systems tend to undercost standard products and overcost specialty products.

False Reason: The opposite is true - traditional systems undercost specialty products that tend to consume more overhead.

In activity-based costing an activity measure is ______. A. an allocation base B. a measure of material costs C. another name for a predetermined overhead rate D. a pool of labor costs

A. an allocation base

Assume a company that uses activity-based costing (ABC) has only two products - A and B. The company's total manufacturing overhead cost of $56,000 has been allocated to the three activities shown below: SetupsMachiningPacking OrdersActivity measure quantity: Product A20 1,000 150Activity measure quantity: Product B20 ? 350Overhead cost per activity cost pool? ? $ 10,000Activity rate$ 150per setup$ 8per MH? If the company decided to use a plantwide overhead rate with machine-hours as the allocation base, what would be its plantwide overhead rate? A. $11.20 B. $10.40 C. $12.20 D. $12.40

A. $11.20

Setting up machines, billing customers, and performing tests at a lab are all examples of a(n) ______. A. activity B. direct labor C. activity measure D. cost pool

A. activity

Organization-sustaining activities is another term for _______-level activities.

facility

Activity-based costing improves the accuracy of product costs by ______. A. increasing the number of cost pools used to accumulate overhead cost B. highlighting the activities that could benefit the most from improvement initiatives C. using a variety of activity measures to assign overhead costs to products D. using cost pools that are more homogeneous than departmental cost pools

A. increasing the number of cost pools used to accumulate overhead cost C. using a variety of activity measures to assign overhead costs to products D. using cost pools that are more homogeneous than departmental cost pools

Benefits of activity-based costing include ______. A. more accurate product costs B. helping managers understand the nature of overhead costs C. reducing the total overhead costs of a company D. helping target areas for process improvement

A. more accurate product costs B. helping managers understand the nature of overhead costs D. helping target areas for process improvement

Rocky Mountain Corporation makes two types of hiking boots—Xactive and Pathbreaker. Data concerning these two product lines appear below: XactivePathbreakerDirect materials per unit$ 65.20 $ 51.40 Direct labor cost per unit$ 18.60 $ 13.40 Direct labor-hours per unit1.4DLHs1DLHsEstimated annual production and sales29,000units79,000units The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead$2,439,840 Estimated total direct labor-hours119,600 DLHs Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 2. The company is considering replacing its conventional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools: Activity Cost Pools and (Activity Measures)Estimated Overhead CostExpected ActivityXactivePathbreakerTotalSupporting direct labor (direct labor-hours)$ 891,02040,60079,000119,600Batch setups (setups)836,000270170440Product sustaining (number of products)632,360112General factory (machine-hours)80,4602,9007,90010,800Total manufacturing overhead cost$ 2,439,840 Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product.

1. Predetermined overhead rate = $20.40/DLH Predetermined overhead rate = Estimated total manufacturing overhead cost/Estimated total direct labor-hoursPredetermined overhead rate = $2,439,840/119,600 DLHs* = $20.40 per DLH 2. Unit product cost of Xactive = $112.36 Unit product cost of Pathbreaker = $85.20 3. Activity rate of supporting direct labor = $7.45/DLH Activity rate of batch setups = $1,900/setup Activity rate of product sustaining = $316,180/product Activity rate of general factory = $7.45/MHR 4. Unit product cost of Xactive = $123.57 Unit product cost of Pathbreaker = $81.09

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 3. What is the activity rate for the Machining activity cost pool? (Round your answer to 2 decimal places.)

Activity rate = $20.50/MH Activity rate = Estimated overhead cost/Expected activity = $246,000/12,000MH = $20.50/MH

Snavely, Incorporated, manufactures and sells two products: Product E1 and Product A7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct E19002.01,800Product A76001.0600Total direct labor-hours 2,400 The direct labor rate is $24.10 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per UnitProduct E1$ 282.00Product A7$ 204.00 The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost PoolsActivity MeasuresEstimated Overhead CostExpected ActivityProduct E1Product A7TotalLabor-relatedDLHs$ 132,4001,8006002,400Machine setupssetups62,4301,0006001,600Order sizeMHs976,4503,7003,4007,100 $ 1,171,280 The total overhead applied to Product E1 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.) A. $1,171,303 B. $647,187 C. $452,790 D. $508,861

B. $647,187

Which of the following are facility-level activities? A. Setting up factory equipment B. Property taxes on plant C. Paying factory insurance D. Arranging for shipping products to a customer

B. Property taxes on plant C. Paying factory insurance

Which of the following statements is true with respect to product-level activities? A. The cost per product increases as the number of units produced increases. B. The cost per product remains the same as the number of batches produced decreases. C. The cost per product increases as the number of batches produced decreases. D. The cost per product decreases as the number of units produced increases.

B. The cost per product remains the same as the number of batches produced decreases.

A predetermined overhead rate in an activity-based costing system is called _______. A. an activity B. an activity rate C. an activity cost pool D. activity-based management

B. an activity rate

Departmental overhead rates may not correctly assign overhead costs due to: A. the use of direct labor hours in allocating overhead costs to products rather than machine time or quantity of materials used. B. the high correlation between direct labor-hours and the incurrence of overhead costs. C. Overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. D. difficulties associated with identifying cost pools for the first stage of the allocation process.

C. Overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.

Which of the following statements is true with respect to batch-level activities? A. The cost per batch increases as the number of the units in the batch increases. B. The cost per batch increases as the number of the units in the batch decreases. C. The cost per batch remains the same as the number of units in the batch changes. D. The cost per batch decreases as the total number of batches processed decreases.

C. The cost per batch remains the same as the number of units in the batch changes.

Assume that a company makes only three products: Product A, Product B, and Product C. Currently, the company uses a conventional cost system that relies on plantwide overhead cost allocation based on direct labor-hours. It is considering replacing its conventional cost system with an activity-based costing (ABC) system.The ABC system would include a total of four activities: Assembly (allocated to products based on direct labor-hours), Machine Setups (allocated to products based on number of setups), Material Handling (allocated to products based on the number of material moves), and Product Design (allocated to products based on the number of products). Product AProduct BProduct CNumber of units produced1,000units7,000units2,000unitsDirect labor hours per unit2hours2hours2hoursNumber of setups30setups50setups20setupsNumber of material moves600moves400moves200movesNumber of products1product1product1product Using the activity-based costing approach, what percent of the company's total Material Handling activity cost would be allocated to Product B? A. 70% B. 25% C. 40% D. 33%

D. 33%

Costs at the batch level depend on the number of ______. A. units sold B. products in a batch C. units produced D. batches processed

D. batches processed

Designing and advertising a good are both ______-level activities. A. batch B. unit C. facility D. product

D. product

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 1. What is the company's plantwide overhead rate? (Round your answer to 2 decimal places.)

Plantwide overhead rate = $59.25/DLH Plantwide overhead rate = Total estimated overhead cost/Total expected direct labor-hours = $829,500/14,000DLHs = $59.25/DLH

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2 decimal places.)

Product design cost of Product Y = 50.00% Product design cost of Product Z = 50.00%

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round your intermediate calculations to 2 decimal places. Round your answers to the nearest dollar amount.)

Total MOH cost = $ 457,500

The following activities occur at Greenwich Corporation, a company that manufactures a variety of products: Required: Classify each of the activities below as either a unit-level, batch-level, product-level, or facility-level activity. Activity: a. Various individuals manage the parts inventories. b. A clerk in the factory issues purchase orders for a job. c. The personnel department trains new production workers. d. The factory's general manager meets with other department heads to coordinate plans. e. Direct labor workers assemble products. f. Engineers design new products. g. The materials storekeeper issues raw materials to be used in jobs. h. The maintenance department performs periodic preventive maintenance on general-use equipment.

a. Product-level b. Batch-level c. Facility-level d. Facility-level e. Unit-level f. Product-level g. Batch-level h. Facility-level

A predetermined overhead rate in an activity-based costing system is called a(n) _______ _______. (Enter only one word per blank.)

activity rate

_______-level activities consist of tasks that are performed each time a batch of goods is handled or processed, regardless of how many units are in a batch. (Enter only one word per blank.)

batch

_________-___________ activities relate to specific products and typically must be carried out regardless of how many batches or units of the product are manufactured. (Enter only one word per blank.)

product-level

An activity that must be done for each item produced is a(n) ______-_______ activity. (Enter only one word per blank.)

unit-level

Which of the following statements is true? When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of low-volume products typically increase more than the unit product costs of high-volume products decrease. When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of high-volume products typically change more than the unit product costs of low-volume products. A. Statement I is true. B. Statement II is true. C. Both statements are true. D. Neither statement is true.

A. Statement I is true.

An activity cost pool accumulates costs for ______ activity measure(s). A. exactly one B. one or more C. multiple

A. exactly one

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 4. What is the activity rate for the Machine Setups activity cost pool?

Activity rate = $550/setup Activity rate = Estimated overhead cost/Expected activity = $137,500/250 setups = $550/setup

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your intermediate calculations and final answers to 2 decimal places.)

General factory cost of Product Y = 60.71% General factory cost of Product Z = 39.29%

Various activities at Companhia de Textils, S.A., a manufacturing company located in Brazil, are listed below. The company makes a variety of products in its plant outside São Paulo. Required: Classify each of the activities as either a unit-level, batch-level, product-level, or facility-level activity. Activity: a. Preventive maintenance is performed on general-purpose production equipment. b. Products are assembled by hand. c. A security guard patrols the company grounds after normal working hours. d. Purchase orders are issued for materials to be used in production. e. Modifications are made to product designs. f. New employees are hired by the personnel office. g. Machine settings are changed between batches of different products. h. Parts inventories are maintained in the storeroom (Each product requires its own unique parts). i. Insurance costs are incurred on the company's facilities.

a. facility-level b. unit-level c. facility-level d. batch-level e. product-level f. facility-level g. batch-level h. product-level i. facility-level

Activity-based costing improves the accuracy of product costs by ______. A. increasing the number of cost pools used to accumulate overhead cost B. using a variety of activity measures to assign overhead costs to products C. highlighting the activities that could benefit the most from improvement initiatives D. using cost pools that are more homogeneous than departmental cost pools

A. increasing the number of cost pools used to accumulate overhead cost B. using a variety of activity measures to assign overhead costs to products D. using cost pools that are more homogeneous than departmental cost pools

Usually, traditional costing ______ high-volume products and ______ low-volume products. A. overcosts; undercosts B. overcosts; overcosts C. undercosts; overcosts D. undercosts; undercosts

A. overcosts; undercosts

An activity that must be done for each item produced is a(n) _______ level activity. A. facility B. batch C. product D. unit

D. unit

Activity-based costing ______. A. computes product costs in the same way as traditional costing B. only considers manufacturing overhead when computing product costs C. always leads to higher product costs than traditional costing D. excludes direct labor from product costs

A. computes product costs in the same way as traditional costing

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)

Activity rate = $25.50/DLH Activity rate = Estimated overhead cost/Expected activity = $357,000/14,000DLHs = $25.50/DLH

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 5. What is the activity rate for the Product Design activity cost pool?

Activity rate = $44,500/product Activity rate = Estimated overhead cost/Expected activity = $89,000/2 products = $44500/product

Mahaley, Incorporated, manufactures and sells two products: Product Q9 and Product F0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct Q99109.18,281Product F09107.16,461Total direct labor-hours 14,742 The direct labor rate is $22.90 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per UnitProduct Q9$ 176.00Product F0$ 147.80 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost PoolsActivity MeasuresEstimated Overhead CostExpected ActivityProduct Q9Product F0TotalLabor-relatedDLHs$ 390,6808,2816,46114,742Machine setupssetups49,3308507501,600Order sizeMHs290,2004,2004,0008,200 $ 730,210 The unit product cost of Product F0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.) A. $753.51 per unit B. $679.51 per unit C. $384.39 per unit D. $516.92 per unit

B. $679.51 per unit

For each unit of a product, the direct material cost is $10, the direct labor cost is $15, and the manufacturing overhead is $16. The total unit product cost using activity-cased costing is ______. A. $9 B. $30 C. $41 D. $25

C. $41 Unit product cost = Direct material cost + Direct labor cost + Manufacturing overhead = $10 + $15 + $16 = $41

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 7. Which of the four activities is a batch-level activity? A. Machining activity B. General factory activity C. Product design activity D. Machine setups activity

D. Machine setups activity Reason: Machine setups is a batch-level activity. A setup is performed to run a batch of units. The cost of the setup is determined by the resources consumed performing the setup and it is not influenced by the number of units processed once the setup is complete.

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 8. Which of the four activities is a product-level activity? A. Machine setups activity B. General factory activity C. Machining activity D. Product design activity

D. Product design activity Reason: The product design activity is a product-level activity. The product design cost is determined by the number of products supported and it is not influenced by the number of batches or units processed.

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to the nearest dollar amount.)

MOH allocated Product Y = $503,625 MOH allocated Product Z = $325,875 MOH assigned = Total direct labor-hours x Plantwide overhead rate per DLH

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

Machine setups cost of Product Y = 16.00% Machine setups cost of Product Z = 84.00%

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

Machining cost of Product Y = 70.83% Machining cost of Product Z = 29.17%

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 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 MOH cost = $372,000

Greenwood 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 PoolActivity MeasureEstimated Overhead CostExpected ActivityMachiningMachine-hours$ 246,00012,000MHsMachine setupsNumber of setups$ 137,500250setupsProduction designNumber of products$ 89,0002productsGeneral factoryDirect labor-hours$ 357,00014,000DLHs Activity MeasureProduct YProduct ZMachining8,5003,500Number of setups40210Number of products11Direct labor-hours8,5005,500 11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

Total overhead cost of Product Y = 60.71% Total overhead cost of Product Y = 39.29%