3 Thakin Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2014 are as follows Overhead Cost Pools Amount Purchasing $ 69,000 Handling materials Production (cutting, milling, finishing) 82,000 210,000 Setting up machines 95.000 Inspecting 90,000 Inventory control (raw materials and finished goods) 126,000 180,000 Total budgeted overhead costs 8852.000 For the last 4 years, Thakin Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2014, 100,000 machine hours are budgeted. Jeremy Nolan, owner- manager of Thaki Stairs Co. recently directed his accountant, Bill Season, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolan's request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Activity Cost Pools Purchasing Cost Drivers Number of orders Number of moves Handling materials Production (cutting, milling, finishing) Direct labor hours Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Expected Use of Cost Drivers 600 8.000 100.000 Number of setups 1.250 Number of inspections 6,000 Number of components 168,000 Square feet occupied 90.000 Steve Hasoan, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve's request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways. Direct materials $103,600 Direct labor Machine hours $112.000 14,500 Direct labor hours Number of purchase orders Number of material moves 5,000 60 800 Number of machine setups 100 Number of inspections 450 Number of components 16.000 Number of square feet occupied 8,000 ACCT212 SEM 81-ASSIGNMENT INSTRUCTIONS A. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. B. What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.) C. What is the manufacturing cost per stairway under the proposed ACTIVITY-BASED COSTING? (Round to the nearest cent. Prepare all of the necessary schedules.) D. Which of the two costing systems is preferable in pricing decisions and why? manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2014 are as follows. Overhead Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Amount $ 69,000 82.000 210,000 95,000 90,000 126,000 180,000 $852.000 For the last 4 years, Thakia, Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2014, 100,000 machine hours are budgeted. Jeremy Nolan, owner- manager of Thakin Stairs Co., recently directed his accountant, Bill Seaston, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolan's request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Activity Cost Pools Purchasing Expected Use of Cost Drivers Handling materials Production (cuiting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Cost Drivers Number of orders 600 Number of moves 8,000 Direct labor hours 100,000 Number of setups 1.250 Number of inspections 6,000 Number of components 168,000 Square feet occupied 90,000 Steve Ha, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve's request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways. Direct materials $103,600 Direct labor Machine hours $112,000 14.500 Direct labor hours Number of purchase orders Number of material moves 5,000 60 800 Number of machine setups 100 Number of inspections 450 Number of components 16,000 Number of square feet occupied 8,000 ACCT212 SEM 181-ASSIGNMENT 1 INSTRUCTIONS A. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. B. What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.) C. What is the manufacturing cost per stairway under the proposed ACTIVITY-BASED COSTING? (Round to the nearest cent. Prepare all of the necessary schedules.) D. Which of the two costing systems is preferable in pricing decisions and why? QUESTION 3 Thakin, Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2014 are as follows. Overhead Cost Pools Purchasing Handling materials Setting up machines Production (cutting, milling, finishing) Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Amount $ 69,000 82,000 210,000 95,000 90,000 126,000 180,000 $852,000 For the last 4 years, Thakin, Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2014, 100,000 machine hours are budgeted. Jeremy Nolan, owner- manager of Thakin Stairs Co., recently directed his accountant, Bill Seagten, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolan's request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Activity Cost Pools Purchasing Expected Use of Cost Drivers Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Cost Drivers Number of orders Number of moves 600 8,000 Direct labor hours 100,000 Number of setups 1,250 Number of inspections 6,000 Number of components 168,000. Square feet occupied 90,000 Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve's request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways. Direct materials Direct labor Machine hours $103,600 $112.000 14.500 Direct labor hours Number of purchase orders 5,000 60 Number of material moves 800 Number of machine setups 100 Number of inspections 450 Number of components 16,000 Number of square feet occupied 8,000 ASSIGNME INSTRUCTIONS A. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. B. What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.) C. What is the manufacturing cost per stairway under the proposed ACTIVITY-BASED COSTING? (Round to the nearest cent. Prepare all of the necessary schedules.) D. Which of the two costing systems is preferable in pricing decisions and why