Answer:
Greenwood Company
1. The plantwide overhead rate for the company is $57
2. Manufacturing overhead allocation using this rate:
Product Y = $57 * 9,000 = $513,000
Product Z = $57 * 3,000 = $171,000
3. The activity rate for the Machining cost pool is $20 per MHs.
4. Machine Setups activity cost pool has an activity rate of $500 per setup.
5. The rate for Product Design activity cost pool is $42,000 per product.
6. General Factory activity cost pool rate is $25.
7. Batch-level activity is Machine setup.
8. Product Design is categorized as a product-level activity.
9. In the ABC system, overhead cost assigned to Product Y totals $447,000.
10. The overhead cost for Product Z in the ABC system is $237,000.
11. The allocation percentage of total overhead costs to Products Y and Z using the plantwide rate is:
Product Y = 75% ($513,000/$684,000 * 100)
Product Z = 25% ($171,000/$684,000 * 100)
12. The percentage of Machining costs assigned to Product Y and Z in the ABC system is:
Product Y = 80% ($160,000/$200,000 * 100)
Product Z = 20% ($40,000/$200,000 * 100)
13. For Machine Setups costs, the assignment percentages for Products Y and Z are:
Product Y = 20% ($20,000/$100,000 * 100)
Product Z = 80% ($80,000/$100,000 * 100)
14. Regarding the Product Design costs, percentages for Products Y and Z show:
Product Y = 50% ($42,000/$84,000 * 100)
Product Z = 50% ($42,000/$84,000 * 100)
15. Lastly, for General Factory costs under the ABC system, the assigned percentages for each product are:
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
The plantwide overhead rate is calculated as 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
