[sagnik2422]

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




Q:
Required:
What is the company’s plantwide overhead rate?


I tried dividing 244,000 / 13,200 but it was wrong.

[paraclete]

You were asked for a "factory wide rate" . To do this you must determine the cost. You used the labour cost the number you want is 213400+61600+78000 but in a system like this how pertinent is a plant wide overhead rate since overheads are allocated on activity?

[paraclete]

I see my intrepretation of the data was incorrect after seeing the formated table in your other question the answer would be 213400+61600+78000+ 244,000