Sidney Industries manufactures a variety of custom products. The company has traditionally used Kplantwide manufacturing overhead rate based on machine hours to allocate manufacturing overhea its products. The company estimates that it will incur $1,200,000 in total manufacturing overhead c in the upcoming year and will use 8,000 machine hours. i Click the icon to view the additional information about the hazardous waste disposal fees.) table 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. Description of Cost Pool Machine maintenance costs... Engineering change orders ..... Hazardous waste disposal. Total overhead cost. Estimated Cost $ $ $ $ X Cost Driver 400,000 Number of machine hours 120,000 Number of change orders 680,000 Pounds of hazardous materials generated 1,200,000 the bla llar Estimated Activity for this Year Requirements 8,000 6,000 2,000 1. Calculate the cost of Job 358 using the traditional plantwide manufacturing overhead rate based on machine hours. 2. Calculate the cost of Job 358 using activity-based costing. 3. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? X Print Data table Done 280 pounds of direct materials at $70 per pound 60 direct labor hours used at $40 per labor hour 90 machine hours used 11 change orders 50 pounds of hazardous waste generated Print Dono - X
Sidney Industries manufactures a variety of custom products. The company has traditionally used Kplantwide manufacturing overhead rate based on machine hours to allocate manufacturing overhea its products. The company estimates that it will incur $1,200,000 in total manufacturing overhead c in the upcoming year and will use 8,000 machine hours. i Click the icon to view the additional information about the hazardous waste disposal fees.) table 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. Description of Cost Pool Machine maintenance costs... Engineering change orders ..... Hazardous waste disposal. Total overhead cost. Estimated Cost $ $ $ $ X Cost Driver 400,000 Number of machine hours 120,000 Number of change orders 680,000 Pounds of hazardous materials generated 1,200,000 the bla llar Estimated Activity for this Year Requirements 8,000 6,000 2,000 1. Calculate the cost of Job 358 using the traditional plantwide manufacturing overhead rate based on machine hours. 2. Calculate the cost of Job 358 using activity-based costing. 3. If you were a manager, which cost estimate would provide you more useful information? How might you use this information? X Print Data table Done 280 pounds of direct materials at $70 per pound 60 direct labor hours used at $40 per labor hour 90 machine hours used 11 change orders 50 pounds of hazardous waste generated Print Dono - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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