Zenco Manufacturing makes two products: Product E05G and Product L64Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products E05G and L64Y. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 285,000 15,000 MHs Machine setups Number of setups $ 180,000 300 setups Product design Number of products $ 64,000 2 products Order size Direct labor-hours $ 350,000 10,000 DLHs Activity Measure Product E05G Product L64Y Machine-hours 12,000 3,000 Number of setups 170 130 Number of products 1 1 Direct labor-hours 3,000 7,000 Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product E05G is closest to:

Respuesta :

Answer:

Zenco Manufacturing

Total overhead cost allocated to Product E05G is closest to:

$263,700

($87.90 * 3,000)

Explanation:

a) Data and Calculations:

Activity Cost Pool     Activity Measure       Total Cost     Total Activity

Machining                  Machine-hours        $ 285,000        15,000 MHs

Machine setups         Number of setups   $ 180,000         300 setups

Product design          Number of products $ 64,000          2 products

Order size                  Direct labor-hours  $ 350,000        10,000 DLHs

                              Total overhead costs  $ 879,000

Plantwide overhead rate = Total overhead divided by total direct hours

= $879,000/10,000

= $87.90

Activity Measure       Product E05G       Product L64Y

Machine-hours           12,000                     3,000

Number of setups           170                         130

Number of products         1                              1

Direct labor-hours      3,000                     7,000