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NEED HELP QUICK! WILL GIVE THUMBS UP!! :) Sommer Industries manufactures a variety of custom products. The company has traditionally used a plantwide manufacturing overhead
NEED HELP QUICK! WILL GIVE THUMBS UP!! :)
Sommer 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 $2,580,000 in total manufacturing overhead costs in the upcoming year and will use 15,000 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: Click the icon to view the expected usage and costs.) During the year, Job 354 is started and completed. Usage for this job follows: (Click the icon to view the usage for Job 354.) Requirements ... More Info Requirements 350 kg of direct materials @ $60 per kg 70 direct labour hours used @ $20 per labour hour 100 machine hours used 10 change orders 95 kg of hazardous waste generated 1. Calculate the cost of Job 354 using the traditional plantwide manufacturing overhead rate based on machine hours. 2. Calculate the cost of Job 354 using activity based costing. 3. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? - x Data Table Description of cost pool Machine maintenance costs Engineering change orders Hazardous waste disposal Total overhead cost Estimated Cost Cost driver $ 900,000 Number of machine hours 150,000 Number of change orders $ 1,530,000 kg of hazardous materials generated $ 2,580,000 Estimated activity for this year 15,000 5,000 4,500 Print Done
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