Reference no: EM132988850

Question - Y Company estimated that it total overhead cost of $600,000. It is considering implementing activity-based costing. Three cost pools (and activity measures) have been identified: machine-related (machine-hours), production orders (number of orders), and product testing (number of tests). The estimated overhead was assigned to the pools as follows: $200,000 to machine-related, $100,000 to production orders, and $300,000 to product testing. Y Company produces two products. The following information is available: Product 1 Product 2 Machine-hours 40,000 10,000 Orders 800 200 Tests 6,000 9,000 Direct labor hours 25,000 15,000 The company currently uses traditional costing and allocates overhead based on direct labor-hours. 

Required -

1. How much overhead is assigned to Product 1 using traditional costing? 

2. How much overhead would be assigned to Product 1 if ABC is used?