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Plantwide and Activity Based Costing BRS Industries manufactures custom lightweight motorbikes. The current cost accounting sy uses machine hours to allocate manufacturing overhead to each
Plantwide and Activity Based Costing BRS Industries manufactures custom lightweight motorbikes. The current cost accounting sy uses machine hours to allocate manufacturing overhead to each job. BRS estimates that in the coming year it will incur $750,000 in manufacturing overhead costs and use 10,000 machine Depending on the specifications requested by the customer, the bike may use hazardous cher that incur greater disposal costs. BRS's traditional accounting system includes the cost of haza waste disposal in with total manufacturing overhead. BRS is planning to implement an activity costing system to more accurately assign hazardous waste disposal costs to each job. Expected usage and costs for manufacturing overhead are as follows: Cost Pool Description Cost Pool Cost Driver Cost Driver Usage Fabrication costs $250,000 Number of machine hours 10,000 Engineering costs $150,000 Number of change 750 orders Hazardous waste disposal $350,000 Gallons of hazardous waste 700 Total manufacturing overhead $750,000 The following information relates to Motorbike #633, which was started and completed during the year: The following information relates to Motorbike #633, which was started and completed during the year: Direct Material cost per pound: $55 Machine hours used: 30 Pounds of Direct Materials used on job: 160 Change orders: Direct Labor cost per hour: $20 Gallons of hazardous waste: Direct Labor Hours used: BRS prices its bikes at 130% of total manufacturing costs. Requirements (You must show your work, including clear labels, for full credit): 1. What is the plantwide overhead rate? 2. Calculate the total cost of Motorbike #633 using BRS's current method of allocating manufacturing overhead based on a plantwide overhead rate. 3. Based on the current (plantwide) costing system, what was BRS's gross profit on Motorbike #633? 4. IC BRS implements an ABC system what are the overhead rates for each activity
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