Cost Pool:

Machine Maintenance Cost – $200,000

Engineering Charge Orders – $100,000

Hazardous Waste Disposal – $30,000

Cost Driver Usage / Cost Pool Rate

Number Machine Hours – 8,000 / $25.00

Number of Charge Orders – 1,250.00 / $80.00

Gallons of Hazardous Waste Generated – 800 / $375.00

During the year, Yacht #633 was started and completed:

DM cost per lb. – $55

Lbs. of DM used on job – 170

DL cost per hr. – $20.00

DLH used – 50

a.      Calculate the cost of Yacht #633 using the Serenity’s current method of allocating manufacturing overhead.

b.     Calculate the cost of Yacht #633 using the proposed activity based costing system. How is this information useful to an environmental management accounting (EMA) system?