Scannell 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 $1,500,000 in total manufacturing overhead costs in the upcoming year and will use 12,000 machine hours. Click the icon to view the additional information about the hazardous waste disposal fees.) 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 356 is started and completed. Usage for this job follows: E (Click the icon to view the usage for Job 356.) Read the requirements Requirement 1. Calculate the cost of Job 356 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) Plantwide mfg. overhead rate More info 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. Data table Estimated Activity for this Year Description of Cost Pool Estimated Cost Cost Driver $ 600,000 Number of machine hours 12,000 Machine maintenance costs Engineering change orders $ 6,000 $ Hazardous waste disposal. 240,000 Number of change orders 660,000 Pounds of hazardous materials generated 1,500,000 2.000 $ Total overhead cost.. Print Done Data table 320 pounds of direct materials at $30 per pound 60 direct labor hours used at $40 per labor hour 100 machine hours used 13 change orders 70 pounds of hazardous waste generated Requirements 1. 2. 3. Calculate the cost of Job 356 using the traditional plantwide manufacturing overhead rate based on machine hours. Calculate the cost of Job 356 using activity-based costing. If you were a manager, which cost estimate would provide you more useful information? How might you use this information
