apter $4$

Question $7$ of $7$

$\frac{-}{11}$

For the last $4$ years, Vaughn Stairs Co$.$ has been charging overhead to products on the basis of machine hours. For the year $2022,100,000$ machine hours are budgeted.

Jeremy Nolan, owner$-$manager of Vaughn 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.

$\backslash$table$[[$Activity Cost Pools,$\backslash$table$[[$Estimated Use of$],[$Cost Drivers$]],],[$Purchasing$,$Number of orders,$600],[$Handling materials,Number of moves,$8,000],[$Production $($cutting$,$ milling, finishing$),$Direct labor hours,$100,000],[$Setting up machines,Number of setups,$1,250],[$Inspecting$,$Number of inspections,$6,000],[$Inventory control $($raw materials and finished goods$),$Number of components,$168,000],[$Utilities$,$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.