Required information The following information applies to th

Required information [The following information applies to the questions displayed below., 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 $732,100 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 Overhead Cost Expected Activity Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products 93,000 Direct labor-hours 259,000 12,000 DLHs 209,000 10, 000 MHs 171,100 290 setups 2 products Activity Measure Product YProduct 2 Machine-hours Number of setups Number of products Direct labor-hours 7,900 50 2,100 240 8,900 3,100 7. Which of the four activities is a batch-level activity? General factory activity Product design activity Machining activity Machine setups activity

Solution

Ans 7 Machine setup activities It is a batch level activity as under each setup no. of goods are produced. Production is made in batached so under each setup no. of goods are produced ans 8 Product design activities It is a product level activity as the design is made for the product irrespective of no. of products produced ans 9 Product Y Product z Activity Estimated cost E Expected activity C Activitiy rate A=E/C (rounded to 2 decimal) Activity B Cost allocated A*B Activity C Cost allocated A*C\\ Machining 209000 10000 20.90 7900 165110 2100 43890 Machine setup 171000 290 589.66 50 29483 240 141518.4 Product design 93000 2 46500 1 46500 1 46500 General factory 259000 12000 21.58 8900 192062 3100 66898 Total 433155 298806 Product Y Total manufacturing overhead cost $433,155 ans 10 Product z Total manufacturing overhead cost $298,806 If any doubt please comment. If satisfied you can rate