Calculate the cost of using activity-based costing. Begin by calculating the allocation rate for each activity. First determine the formula to compute the allocation rate in an activity-based costing system, then compute the rate for each activity. (Abbreviations used: est. = estimated, MH=machine hours, Mach.=Machine, Eng.=Engineering)
Homework: CH4 Question 2, E4-23A (similar to) Part 5 of 9 > HW Score: 58.21%, 34.92 of 60 points Points: 3.64 of 10 Save Sidney Industries manufactures a variety of custom products. The company has traditionally used a plantwide manufacturing overhead rate based on machine hours to allocate manufacturing overhead to its products. The company estimates that it will incur $1,650,000 in total manufacturing overhead costs in the upcoming year and will use 11,000 machine hours. Click the icon to view the additional information about the hazardous waste disposal fees.) Expected usage and costs for manufacturing overhead activities for the upcoming year are as follows: (Click the icon to view the expected usage and costs.) During the year, Job 355 is started and completed. Usage for this job follows: (Click the icon to view the usage for Job 355.) C. Read the requirements. Begin by calculating the allocation rate for each activity. First determine the formula to compute the allocation rate in an activity-based costing system, then compute the rate for each activity. (Abbreviations used: est. = estimated, MH=machine hours, Mach.=Machine, Eng.=Engineering) Activity cost Total est. activity cost pool Total est. activity allocation base allocation rate Mach. maintenance per MH Requirements 1. 2. 3. Calculate the cost of Job 355 using the traditional plantwide manufacturing overhead rate based on machine hours. Calculate the cost of Job 355 using activity-based costing. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? Print Done Data table Estimated Activity for this Year Description of Cost Pool Estimated Cost Cost Driver $ 11,000 Machine maintenance costs ..... Engineering change orders Hazardous waste disposal.. $ 5,000 330,000 Number of machine hours 200,000 Number of change orders 1,120,000 Pounds of hazardous materials generated 1,650,000 $ 3,500 $ Total overhead cost. Print Done - X Data table 290 pounds of direct materials at $50 per pound 30 direct labor hours used at $30 per labor hour 120 machine hours used 10 change orders 60 pounds of hazardous waste generated Print Done
