Hickory Company manufactures two products14,000 units of Product Y and 6,000 units of Product Z....
80.2K
Verified Solution
Link Copied!
Question
Accounting
Hickory Company manufactures two products14,000 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 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 Estimated Use Driver Machining Machine-hours $198,000 10,000 MHs Machine setups Number of setups $86,400 180 setups Production design Number of products $82,000 2 products General factory Direct labor-hours $248,000 12,000 DLHs Activity Measure Product Y Product Z Machine-hours 6,800 3,200 Number of setups 50 130 Number of products 1 1 Direct labor-hours 7,800 4,200 Calcualate the cost of a unit of product for products Y & Z using the plantwide overhead rate. Calculate the cost of a unit of product for products Y & Z using ABC Explain why the two product costs differ. How could the use of the POHR versus ABC affect the company's pricing strategy?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
