Question details

Uses a plantwide overhead rate based on direct labor-hours.
$ 15.00

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 Pool Activity Measure Estimated Overhead Cost Expected 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 Measure Product Y Product Z
  Machine-hours 6,400   4,600  
  Number of setups 60   80  
  Number of products 1   1  
  Direct labor-hours 7,400   5,800  


What is the company’s plant-wide overhead rate?

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