not same as solutions posted on chegg
Stellar Stairs Co.designs and builds factory-made premium wooden stairs for homes. The manufactured stair components (spindles, risers, hangers, handrails) permit installation of stairs of varying lead widths. All are made of white Oakwood. The company's budgeted manufacturing overhead costs for 2016 are as follows: Overhead Cost Pools Amount Purchasing $69,000 Handling materials 82,000 Production (cutting, milling, finishing) 210,000 Setting up machines 95.000 Inspecting 90,000 Inventory control (raw materials and finished goods) 126,000 Uuties 180.000 Total budget overhead costs $85.000 For the last four years, Stelar Stairs Co has been charging overhead to products on the basis of machine hours. For 2016, it has budgeted 100,000 machine hours. Heather Fujar owner-manager of Stellar Stairs Co, recently directed her accountant, kike Nishikawa, to implement the activity-based costing system that she has repeatedly proposed. At Heather Fujar's request, Kiko and the production for person identity the following cost drivers and their usage for the previously budgeted overhead cost pools Expected Use of Activity Cost Pools Cost Drivers Cost Drivers Purchasing Number of orders 600 Handing materials Number of moves 3,000 Production (cutting, miling, finishing) Direct labour hours 104,440 Setting up machines Number of set-ups 1,530 Inspecting Number of inspections 6,340 Inventory control (raw materials and finished goods) Number of components 171,620 Unities Square metres occupied 9,850 Jason Dion, sales manager, has received an order for 280 stairs from Community Builders, Inc., a large housing development contractor At Jason's request, Kiko prepares cost estimates for producing components for 280 Stairways so Jason can submit a contract price per star to Community Builders. She accumulates the following data for the production of 280 stairways Direct materials $100,600 Direct labour 112,000 Machine hours 14,500 Direct Inbour hours Number of purchase orders 60 Number of material moves 100 Number of machine set-ups 100 Number of inspections Number of components 16,000 Number of square metres occupied 800 5.000 *(a) Calculate the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, e.g. 15.25.) Predetermined overhead rate $ per machine hour *(b) What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 15.25.) Manufacturing cost per stairway What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g. 15.25.) Manufacturing cost per stairway (d) Which of the two costing systems is preferable in pricing decisions
