it will incur $$1,520,000$ in total manufacturing overhead costs in the upcoming year and will use $8,000$ machine hours.

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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$)$

Plantwide manufacturing

overhead rate

Requirements

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?

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Additional information

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.

Expected usage and costs for manufacturing overhead activities for the upcoming year are as follows:

During the year, Job $351$ is started and completed. Usage for this job follows:

$260$ pounds of direct materials at $$20$ per pound

$60$ direct labor hours used at $$30$ per labor hour

$80$ machine hours used

$13$ change orders

$90$ pounds of hazardous waste generated