- More Info 390 kg of direct materials @ $85 per kg 70 direct labour hours used @ $30 per labour hour 100 machine hours used 6 change orders 70 kg of hazardous waste generated Print Done Data Table Estimated activity Description of cost pool Estimated Cost Cost driver for this year $ 1,080,000 Number of machine hours 18,000 Machine maintenance costs Engineering change orders $ 5,000 $ Hazardous waste disposal 100,000 Number of change orders kg of hazardous materials 350,000 generated 1,530,000 1,000 $ Total overhead cost Print Done Smith 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 $1,530,000 in total manufacturing overhead costs in the upcoming year and will use 18,000 machine hours. Up to this point, hazardous waste disposal fees have been absorbed into the plantwide manufacturing overhead rate and allocated to all 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 been negatively impacted. Company management wants to implement an activity based costing system so that managers know the cost of each product, including its hazardous waste disposal costs. Expected usage and costs for manufacturing overhead activities for the upcoming year are as follows: E: (Click the icon to view the expected usage and costs.) During the year, Job 352 is started and completed. Usage for this job follows: (Click the icon to view the usage for Job 352.) Requirements -..-. Requirement 1. Calculate the cost of Job 352 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 Calculate the cost of Job 352. Job Cost Record Manufacturing Costs JOB 352 Total job cost Requirement 2. Calculate the cost of Job 352 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 Mach, maintenance per MH per order Eng. change orders Waste disposal per kg Calculate the cost of Job 352 using activity-based costing. Job Cost Record Manufacturing JOB 352 Costs