1. McQuinn's Machining produces specialized equipment. Currently, overhead costs are allocated using machine hours. McQuinn's CEO...

 

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1. McQuinn's Machining produces specialized equipment. Currently, overhead costs are allocated using machine hours. McQuinn's CEO has heard about activity based costing, and would like to see if it makes any difference in the costs allocated to jobs at the company. The accounting staff has provided the following information about manufacturing overhead: Cost Driver Cost Pool Labor related Equipment Quality control Total MOH Amount S30,000 Direct labor hours $20,000 Machine hours $50,000 Number of inspections S100,000 The company estimates that it will perform 1,000 inspections each year and will use 20,000 machine hours and 3,000 direct labor hours. Job FWS will require 100 direct labor hours, 85 machine hours, and 60 inspections. Using activity based costing, what amount of manufacturing overhead will be allocated to Job FWS? а. b. What amount would McCallum allocate to job FWS using their current, traditional system? 1. McQuinn's Machining produces specialized equipment. Currently, overhead costs are allocated using machine hours. McQuinn's CEO has heard about activity based costing, and would like to see if it makes any difference in the costs allocated to jobs at the company. The accounting staff has provided the following information about manufacturing overhead: Cost Driver Cost Pool Labor related Equipment Quality control Total MOH Amount S30,000 Direct labor hours $20,000 Machine hours $50,000 Number of inspections S100,000 The company estimates that it will perform 1,000 inspections each year and will use 20,000 machine hours and 3,000 direct labor hours. Job FWS will require 100 direct labor hours, 85 machine hours, and 60 inspections. Using activity based costing, what amount of manufacturing overhead will be allocated to Job FWS? а. b. What amount would McCallum allocate to job FWS using their current, traditional system?

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