margins on all products have he * More Info 300 kg of direct materials @ $50 per kg 55 direct labour hours used @ 520 per labour hour 100 machine hours used 6 change orders 50 kg of hazardous waste generated eth bute Print Done Scofield Industries manufactures a variety of custom products. The company has traditionally used a plantvide manufacturing Company management wants to implement an activity based costing system so that managers know the cost of each product, overhead rate based on machine hours to allocate manufacturing overhead to its products. The company estimates that it will including its hazardous waste disposal costs. Expected usage and costs for manufacturing overhead activities for the upcoming incur $790,000 in total manufacturing overhead costs in the upcoming year and will use 10,000 machine hours. Up to this point, year are as follows: hazardous waste disposal fees have been absorbed into the plantwide manufacturing overhead rate and allocated to all B (Click the icon to view the expected usage and costs.) products as part of the manufacturing overhead process. Recently, the company has been experiencing significantly increased waste disposal fees for hazardous waste generated by certain products, and as a result, profit margins on all products have During the year, Job 356 is started and completed. Usage for this job follows: been negatively impacted. (Click the icon to view the usage for Job 356.) Requirements Requirement 1. Calculate the cost of Job 356 using the traditional plantwide manufacturing overhead rate based on machine hours Begin by calculating the predetermined manufacturing overhead rate. First, identify the formula used to compute the predetermined manufacturing overhead rate, then compute the rate. (Abbreviations used: MOH = manufacturing overhead) Predetermined manufacturing overhead rate Data Table X Calculate the cost of Job 356. Job Cost Record JOB 356 Manufacturing Costs Description of cost pool Machine maintenance costs Engineering change orders Hazardous waste disposal Estimated Cost Cost driver S 250,000 Number of machine hours S 240,000 Number of change orders S 300,000 kg of hazardous materials generated S 790,000 Estimated activity for this year 10,000 4.000 1,000 Total job cost Total overhead cost Requirement 2. Calculate the cost of Job 356 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) Activity cost allocation rate per MH Mach, maintenance Eng, change orders Waste disposal per order E per kg Calculate the cost of Job 356 using activity-based costing. Job Cost Record JOB 356 Manufacturing Costs Calculate the cost of Job 356 using activity-based costing. Job Cost Record JOB 356 Manufacturing Costs Total job cost Requirement 3. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? The cost estimate based on the would provide more useful information because this cost estimate takes into account This information can be used to
