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Crane 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
Crane 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 2022 are as follows. 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. What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.) Cost per stairway Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate per machine hour Activity Purchasing Handling materials Production Setting up machines Inspecting Inventory control Overhead Rate $ per order $ per move $ per D/L hour per setup per inspection per component $ per sq. ft. What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g. 12.25.) Total manufacturing cost per stairway Calculate total overhead assigned under ABC. Total overhead assigned For the last 4 years, Crane 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 Crane 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. Direct materials Direct labor Machine hours Direct labor hours Number of purchase orders Number of material moves Number of machine setups Number of inspections Number of components Number of square feet occupied $103,900 $113,100 15,000 5,400 60 800 100 450 16,000 8,000
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