Question

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 $1,515,000 in total manufacturing overhead costs in the upcoming year and will use 15,000 machine hours.

Scannell Industries manufactures a variety of custom products. The company has traditionally used a plantwide Expected usage and costs for manufacturing overhead activities for the upcoming year are as follows company estimates that it will cr $1,515,000 in total manufacturing overhead costs in the upcoming year and will use 15,000 machine hours. ng the year, Job 350 is started and completed. Usage for this job follows: Click the icon to view the additional information about the hazardous waste disposal fees.) lick the icon to view the usage for Job 350.) Read the requirements.

What is manufacturing overhead allocated? and the total job cost?

Answer 1

Job cost records JOB 350	Manufacturing costs
Direct material	$ 18,200.00
Direct labor	$    2,250.00
Manufacturing overheads	$ 12,120.00
Total job Cost	$ 32,570.00

Manufacturing overheads applied = Overhead rate x Machine hours for JOB 350

Manufacturing overheads applied = $101 x 120 machine hours

Manufacturing overheads applied = $12,120

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Solution using ABC Costing

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost	Expected Activity (B)	Activity rate (A/B)
Machine maintenance costs	Number of Machine hours	$ 1,50,000.00	15,000	$      10.00	Per Machine hours
Engineering change orders	Number of change orders	$    60,000.00	3000	$      20.00	Per change orders
Hazardous waste disposal	Number of hazardous material generated	$13,05,000.00	4500	$   290.00	Per hazardous material generated

               

Cost assigned to Basic model
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Machine maintenance costs	$          10.00	120	$                  1,200
Engineering change orders	$          20.00	6	$                120.00
Hazardous waste disposal	$       290.00	90	$          26,100.00
Total Overheads assigned			$          27,420.00

	Job 350 cost
Direct material	$       18,200.00
Direct labor	$         2,250.00
Overheads	$       27,420.00
Total Cost	$       47,870.00