Sebago Industries manufactures a variety of custom products. The company has company management wants to implement an activity based costing system so traditionally used a plantwide manufacturing overhead rate based on machine that managers know the cost of each product, including its hazardous waste hours to allocate manufacturing overhead to its products. The company disposal costs. Expected usage and costs for manufacturing overhead activities estimates that it will incur $1,180,000 in total manufacturing overhead costs in for the upcoming year are as follows: the upcoming year and will use 10,000 machine hours. Up to this point, (Click the icon to view the expected usage and costs.) hazardous waste disposal fees have been absorbed into the plantwide manufacturing overhead rate and allocated to all products as part of the During the year, Job 356 is started and completed. Usage for this job follows: manufacturing overhead process. Recently, the company has been experiencing (Click the icon to view the usage for Job 356.) significantly increased waste disposal fees for hazardous waste generated by Requirements certain products, and as a result, profit margins on all products have been negatively impacted Requirement 1. Calculate the cost of Job 356 using the traditional plantwide manufacturing overhead rate based on machine hours. Begin by calculating the predetermined manufacturing overhead rate. First, identify the formula used to compute the predetermined manufacturing overhead rate, then compute the rate. (Abbreviations used: MOH = manufacturing overhead) Predetermined manufacturing overhead rate Calculate the cost of Job 356. Manufacturing Job Cost Record JOB 356 Costs Total job cost Requirement 2. Calculate the cost of Job 356 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) Activity cost allocation rate Mach, maintenance Eng, change orders per MH por order Waste disposal per kg Calculate the cost of Job 356 using activity-based costing. Job Cost Record Manufacturing JOB 356 Costs Total job cost Requirement 3. If you were a manager, which cost estimate would provide you more usetul information? How might you use this information? The cost estimate based on the would provide more useful information because this cost estimate takes into This information can be used to account ISICO VIEW Apoco sayo and waste disposal fees have been absorbed into the plantwide ring overhead rate and allocated to all products as part of the ring overhead process Recently the company has been ng sign by cert Data Table negati ne cos During the year, Job 356 is started and completed. Usage for this job A (Click the icon to view the usage for Job 356.) X Record Description of cost pool Machine maintenance costs Engineering change orders Hazardous waste disposal Total overhead cost Estimated Cost Cost driver $ 300,000 Number of machine hours $ 80,000 Number of change orders 800,000 kg of hazardous materials generated 1,180,000 Estimated activity for this year 10,000 2,000 $ 2,500 ost $ ent 2. a Print alculati ne rate Done tem, the Activity cost allocation rate sorbed into the plantwide all pri he coll er haza 0 More Info ns on Click the icon to view the e During the vear Job 356 is started X 6 usin pn ma he pre ufactur I: MOH 330 kg of direct materials @ $75 per kg 90 direct labour hours used @ $50 per labour hour 125 machine hours used 13 change orders 85 kg of hazardous waste generated Verhe Print Done Many Costs
