The accounting staff has provided the following information about manufacturing
overhead:
Cost Pool Amount Cost Driver
Setups $30000 Number of setups
Equipment $20000 Number of machine hours
Inspection $50000 Number of inspections
The company estimates that it will perform 150 setups and 1000 inspections each year and will use 20000 machine hours.
Job FWS will require 18 setups 85 machine hours and 60 inspections.
Required:
a. What amount of manufacturing overhead would McQuinn allocate to
Job FWS if they switch to Activity Based Costing?
b. What amount of manufacturing overhead would McQuinn allocate to job FWS if they instead use machine hours as the sole allocation basis?