Sebago 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 comma 440 comma 000 in total manufacturing overhead costs in the upcoming year and will use 9 comma 000 machine hours.
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Part 1
Requirement 1. Calculate the cost of Job 350 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)
Part 2
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Plantwide manufacturing overhead rate
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Part 3
Calculate the cost of Job 350.
Job Cost Record
Manufacturing
JOB 350
Costs
Total job cost
Part 4
Requirement 2. Calculate the cost of Job 350 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)
Activity cost
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allocation rate
Part 5Part 6Part 7
Mach. maintenance
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per MH
Eng. change orders
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per order
Waste disposal
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per pound