Cowan Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: (Click the icon to view the activity costs and drivers.) The Job Cost Record for Job #624 revealed that direct materials requisitioned for the job totaled $1,100. The Job Cost Record also showed that direct labor for this job totaled 6 hours at a wage rate of $22 per hour. Other data collected on the resources used by Job #624 included: (Click the icon to view the other data.) Read the requirements. Requirement 1. Calculate the activity cost allocation rate for each of the five pools listed in the table. (Round the allocation rate to the nearest cent. Abbreviations used: DL = direct labor, MH = machine hour.) Total activity cost pool 162,500 Total activity allocation base 2,500 $ $ Machine setup Machining Activity cost allocation rate 65.00 per setup 165.00 per MH 5.00 per cloth 80,00 per test $ 1,155,000 7,000 = $ $ + 9,000 Polishing Quality control Facility level costs $ 45,000 240,000 135,000 3,000 = $ $ 45,000 3.00 per DL hour Requirement 2. Calculate the total cost of Job #624 (use an ABC costing system). Manufacturing Costs Job Cost Record JOB #624 Direct materials Direct labor $ 1,100 $ 132 Manufacturing overhead allocated $ 1,273 $ 2,505 Total job cost Requirement 3. Why would ABC provide a more accurate allocation of manufacturing overhead (MOH) than a plantwide rate? The cost estimate based on ABC would provide a more accurate allocation of MOH than a plantwide rate because this cost estimate takes into account the specific resources used by each job . This information can be used to price jobs based on more accurate costs Requirement 4. Assume that Cowan Products used a traditional costing system rather than an ABC system. Its plantwide MOH rate would have been determined using direct labor (DL) hours as the allocation base. How much cost distortion would have occurred on this job? Begin by calculating the plantwide overhead rate. First identify the formula used to compute the plantwide overhead rate, then compute the rate. (Round the rate to the nearest whole dollar.) Total estimated manufacturing overhead Total estimated labor hours = Plantwide overhead rate $ 1,737,500 45,000 $ 39 How much cost distortion would have occurred on this job? (Use parentheses or a minus sign for under-costed amounts.) Job #624 Plantwide overhead allocated Less: ABC Cost distortion difference Enter any number in the edit fields and then click Check Answer 1 Data Table Total estimated MOH costs related to activity Total estimated amount of allocation base activity Activity Machine setup $ 162,500 2,500 setups 1,155,000 Machining Polishing... Quality control.. 45,000 7,000 machine hours 9,000 polishing cloths 3,000 tests run 240,000 135,000 $ Facility-level costs. 45,000 DL hours $ 1,737,500 Total manufacturing overhead (MOH) .. Print Done X i Data Table 4 machine setups required 5 machine hours 2 polishing cloths 2 quality control tests run Print Done