Part C: Calculating Costs Serenity Now Industries manufactures custom fiberglass hulls for luxury yachts and pleasure boats. The current cost accounting system uses machine hours to allocate manufacturing overhead to each job. Serenity estimates that in the coming year it will incur $600,000 in manufacturing overhead costs and use 8,000 machine hours. Depending on the specifications requested by the customer, the hull may use hazardous chemicals t includes the cost of hazardous waste disposal in with total manufacturing overhead. Serenity is planning to implement an activity based costing system to more assign hazardous waste disposal costs to each job. hat incur greater disposal costs. Serenity's traditional accounting system Expected usage and costs for manufacturing overhead are as follows: Cost driver usage Cost pool rate Cost pool $200,000 100,000 Number of change orders 1,250.00 $300,000 generated Cost driver Cost pool description Machine maintenance costs Engineering change orders Hazardous waste umber of machine 8,000 5.00 urs $80.00 lons of hazard waste $375.00 During the year, Yacht #633 was started and completed: M cost per lb. bs. of DM used on job L cost per hr LH used 170 20.00 Requirements: Calculate the cost of Yacht #633 using the Serenity's current method of allocating manufacturing overhead a. b. Calculate the cost of Yacht #633 using the proposed activity based costing system. How is this information useful to an environmental management accounting (EMA) system? Part C: Calculating Costs Serenity Now Industries manufactures custom fiberglass hulls for luxury yachts and pleasure boats. The current cost accounting system uses machine hours to allocate manufacturing overhead to each job. Serenity estimates that in the coming year it will incur $600,000 in manufacturing overhead costs and use 8,000 machine hours. Depending on the specifications requested by the customer, the hull may use hazardous chemicals t includes the cost of hazardous waste disposal in with total manufacturing overhead. Serenity is planning to implement an activity based costing system to more assign hazardous waste disposal costs to each job. hat incur greater disposal costs. Serenity's traditional accounting system Expected usage and costs for manufacturing overhead are as follows: Cost driver usage Cost pool rate Cost pool $200,000 100,000 Number of change orders 1,250.00 $300,000 generated Cost driver Cost pool description Machine maintenance costs Engineering change orders Hazardous waste umber of machine 8,000 5.00 urs $80.00 lons of hazard waste $375.00 During the year, Yacht #633 was started and completed: M cost per lb. bs. of DM used on job L cost per hr LH used 170 20.00 Requirements: Calculate the cost of Yacht #633 using the Serenity's current method of allocating manufacturing overhead a. b. Calculate the cost of Yacht #633 using the proposed activity based costing system. How is this information useful to an environmental management accounting (EMA) system
