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. Estimated Activity Description of Cost Pool Estimated Cost Cost Driver for this Year 6 Machine maintenance costs ....... Engineering change orders ........ $ 10,000 3,000 200,000 Number of machine hours .............. 270,000 Number of change orders 510,000 Pounds of hazardous materials generated .. 980,000 Hazardous waste disposal ..... 1,500 6 | 67 || | Total overhead cost...................... 350 pounds of direct materials at $70 per pound 80 direct labor hours used at $35 per labor hour 70 machine hours used 6 change orders 30 pounds of hazardous waste generated 1. 2. 3. Calculate the cost of Job 351 using the traditional plantwide manufacturing overhead rate based on machine hours. Calculate the cost of Job 351 using activity-based costing. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? Santry 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 $980,000 in total manufacturing overhead costs in the upcoming year and will use 10,000 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: E: (Click the icon to view the expected usage and costs.) During the year, Job 351 is started and completed. Usage for this job follows: | (Click the icon to view the usage for Job 351.) Read the requirements. Requirement 1. Calculate the cost of Job 351 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