Implementing an activity-based costing

Reference no: EM131024852

Exercise 1:

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 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:

Exercise 2:

What is the company's plantwide (traditional) overhead rate?

Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y? How much is allocated to Product Z?

Kirkaid Company recorded the following transactions for the just completed month.

$86,000 in raw materials were purchased on account.
$84,000 in raw materials were requisitioned for use in production. Of this amount, $72,000 was for direct materials and the remainder was for indirect materials.
Total labor wages of $108,000 were incurred. Of this amount, $105,000 was for direct labor and the remainder was for indirect labor.
Additional manufacturing overhead costs of $197,000 were incurred.

Required:

Record the above transactions in journal entries.

Reference no: EM131024852

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