FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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al 15 Chapter Four
Activity Cost Pool
Machining
Machine setups
Production design.
General factory
Activity Measure
Machining
Required information
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:
Number of setups
Number of products.
Direct labor-hours
Activity Measure.
Machine-hours
Number of setups
Number of products
Direct labor-hours.
Activity rate
Saved
per setup
Estimated
Overhead Cost
$ 249,600
$ 162,400
$ 92,000
$ 309,600
4. What is the activity rate for the Machine Setups activity cost pool?
Product Y Product Z
8,800
3,200
40
240
1
1
8,800
3,200
S
15
Expected Activity
12,000 MHS
280 setups
of 15
2 products
12,000 DLHS
www
www
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Transcribed Image Text:al 15 Chapter Four Activity Cost Pool Machining Machine setups Production design. General factory Activity Measure Machining Required information 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: Number of setups Number of products. Direct labor-hours Activity Measure. Machine-hours Number of setups Number of products Direct labor-hours. Activity rate Saved per setup Estimated Overhead Cost $ 249,600 $ 162,400 $ 92,000 $ 309,600 4. What is the activity rate for the Machine Setups activity cost pool? Product Y Product Z 8,800 3,200 40 240 1 1 8,800 3,200 S 15 Expected Activity 12,000 MHS 280 setups of 15 2 products 12,000 DLHS www www Help Next > Huma Save & Exi Che
Expert Solution
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Step 1

Activity rate is the rate which is use to charged overhead to related products. this rate is usees in activity based costing where we need to calculate activity rates for each activity.

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