Hickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labour-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

 

Machining Machine Setup Production Design General Factory Activity Measure machine-hours Number of setups number of products Direct Labour-hours Activity Measure machine hours Number of setups Number of products Direct Labour Hours Estimated Overhead $200,000 $100,000 $84000 $300,000 Product Y 7000 50 1 8000 Expected Activity 10,000 MH 200 setups 2 products 12,000 DLHS Product Z 3000 150 1 4000