Maryville Manufacturing Maryville Manufacturing designs and builds custom mudroom storage benches. All of the mudroom storage benches are constructed with rustic hickory. Its budgeted manufacturing costs for the 2021 year are as follows. Overhead Cost Pools Amount Purchasing $45.000 Handling materials 50,000 Production (cutting milling, finishing) 130,000 Setting up machines 85.000 Inspecting 60,000 Inventory control raw materials and finished goods) 80,000 Utilities 100,000 Total budgeted overhead costs $550,000 For the last 5 years, Maryville Manufacturing has been charging overhead to products on the basis of materials cost. For the year 2021, materials cost of $500,000 were adgeted. Jim Johnson, owner-manager of Maryville Manufacturing, recently directed his accountant, Ledger Kaufman, to implement the activity-based costing system that he has repeatedly proposed. At Jim's request, Ledger and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools, Overhead Cost Pools Activity Cost Drivers Purchasing Number of orders Handling materials Number of moves Production (cutting, milling finishing) Direct labor hours Setting up machines Number of setups Inspecting Number of inspections Inventory control raw materials and finished goods) Number of components Utilities Square feet occupied Expected Use of Cost Drivers 500 5.000 65,000 1,000 4,000 40,000 50,000 Doug Russell, sales manager, has received an order for 12 custom mudroom storage benches from Homes by Kathy. At Doug's request, Ledger prepares costs estimates for producing 12 mudroom storage benches so Doug can submit a contract price per mudroom storage bench to Homes by Kathy. He accumulates the following data for the production of 12 mudroom storage benches. Direct materials $5,200 Direct labor $3,500 Direct labor hours 200 Number of purchase orders 3 Number of material moves 32 Number of machine setups 4 Number of inspections 20 Number of components 640 Number of square feet occupied 320 1. Compute the predetermined overhead rate using traditional costing with direct materials cost as the allocation base Budgeted Overhead Budgeted Direct Material $550,000 500,000 $1.10 Predetermined Overhead 2. Compute the total cost of manufacturing one mudroom storage bench using direct materials cost as the allocation base for manufacturing overhead. Total cost of manufacturing one mudroom storage $1,201.67 Direct Materials Direct Labor Applied manufacturing overhead Total manufacturing cost $5,200 $3,500 $5.720.00 $14,420 Number of Mudroom Storage 12 Total manufacturing Cost 14,420 Number of bench 12 Cost of one mudroom storage bench $1,201.67 3. Compute the predetermined overhead rate using traditional costing with direct labor hours as the allocation base. Predetermined Overhead Rate using traditional costing Overhead Cost Pools Amount Purchasing $45,000 Handling materials $50,000 Producting (cutting, milling, finishing) $130,000 Setting up machine $85,000 Inspecting $60,000 Inventory control $80,000 Utilities $100,000 Total budgeted Overhead costs $550,000 Total labor hours 65,000 predetermined overhead rate labor hour predetermind overhead rate 550,000 65,000 $8.46 per labor hour 4. Compute the total cost of manufacturing one mudroom storage bench using direct labor hours as the allocation for manufacturing overhead. Total cost of manufacturing 12 mudroom storage benches Total cost of manufacturing 12 mudroom storage benches Direct Materials Direct Labor Manufacturing overhed applied Labor hours use for 12 storage benches overhead rate $5,200 $3,500 $8.46 $1,692.31 Total cost for 12 storage benches $10,392.31 Total Cost for 1 storage bench $866.03 5. Compute the predetermined overhead rate per cost driver for each of the overhead cost pools using the proposed activity-based costing system. e Question please show step by step
