PLEASE DISREGARD THE NUMBERS following the first 2 photos. Those are numbers from a previous problem but the questions are still the same. Thank you so much.
Skath 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 $1,710,000 in total manufacturing overhead costs in the upcoming year and will use 10,000 machine hours. i Click the icon to view the additional information about the hazardous waste disposal fees.) Requirement 1. Calculate the cost Begin by calculating the plantwide o manufacturing) More info Print 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 358 is started and completed. Usage for this job follows: (Click the icon to view the usage for Job 358.) 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. Done Dand the sandaa na maba X rate. (Abbreviations used: MOH = manufacturing overhead; mfg. = Data table Description of Cost Pool Machine maintenance costs Engineering change orders Hazardous waste disposal Total overhead cost Estimated Cost GA GA Cost Driver 300,000 Number of machine hours 450,000 Number of change orders 960,000 1,710,000 Print Pounds of hazardous materials generated Done Estimated Activity for this Year 10,000 5,000 3,000 Data table cted usage and costs.) and completed. Usage for this job follows: e for Job 358.) tions used: MOH = manufacturing overhead; mfg. 320 pounds of direct materials at $35 per pound 40 direct labor hours used at $50 per labor hour 140 machine hours used 13 change orders 90 pounds of hazardous waste generated X Calculate the cost of J8B 358 Using activity-based costing. Job Cost Record JOB 358 Direct materials Direct labor Manufacturing Costs $ 23,100 2,500 22,510 48,110 Manufacturing overhead allocated 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 activity-based costing rates This information can be used to price jobs based on more accurate costs would provide more useful information because this cost estimate takes into account the specific resources used by each product. Requirement 2. Calculate the cost of Job 358 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, Mach.=Machine, Eng. Engineering) Total est. activity cost pool 450,000 420,000 1,485,000 Mach. maintenance Eng. change orders Waste disposal Calculate the cost of Job 358 using activity-based costing. + + + Total est. activity allocation base 15,000 6,000 4,500 = = Activity cost allocation rate 30 70 330 per MH per order per pound Requirement 1. Calculate the cost of Job 358 using the traditional plantwide manufacturing overhead rate based on machine hours. Begin by calculating the plantwide overhead rate. First identify the formula used to compute the plantwide overhead rate, then compute the rate. (Abbreviations used: MOH = manufacturing overhead; mfg. = manufacturing) Total estimated manufacturing costs 2,355,000 Calculate the cost of Job 358. Job Cost Record JOB 358 Direct materials Direct labor Manufacturing overhead allocated Total job cost $ GA Estimated total machine hours Manufacturing Costs 23,100 2,500 9,420 35,020 15,000 = Plantwide mfg. overhead rate = $ 157
