$74,400 211,000 129,360 450,000 Deremy Nolan, Expected Use of Cost Number of moves Direct labor hours Number of inspections Number of components Square feet occupied Direct materials 5,600

CALCULATOR PRINTER VERSION BACK NEW Problem 17-3A (Part Level Submission) Shaker 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 2017 are as follows. Overhead Cost Pools Purchasing Handling materials Amount $74,400 82,400 Production (cutting, milling, finishing) Setting up machines Inspecting 211,000 102,500 120,000 Inventory control (raw materials and finished goods) Utilities 129,360 Total budgeted overhead costs 450,000 $1,169,660 For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2017, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Shaker Stairs Co., recently directed his accountant, Bill Seagren, 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. Expected Use of Cost Drivers Activity Cost Pools Purchasing Handling materials Cost Drivers Number of orders Number of moves Production (cutting, milling, finishing) Setting up machines Inspecting Direct labor hours Number of setups Number of inspections Inventory control (raw materials and finished goods) Number of components Square feet occupied 600 8,000 100,000 1,250 6,000 168,000 90,000 Utilities 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 $104,300 $112,800 Direct labor hours Number of purchase orders 14,900 5,600 60