P4.3A (LO 1, 2), AN Writing Shaker Stairs Co. designs and builds factory-made premium wooden stairways...

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P4.3A (LO 1, 2), AN Writing Shaker Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) per- mit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manu- facturing overhead costs for the year 2020 are as follows. Amount $ 75,000 Assign overhead costs using traditional costing and ABC; compare results. Overhead Cost Pools Purchasing Handling materials 82,000 Production (cutting, milling, finishing) 210,000 Setting up machines 105,000 Inspecting 90,000 Inventory control (raw materials and finished goods) 126,000 Utilities 180,000 Total budgeted overhead costs $868,000 For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2020, 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 pre- viously budgeted overhead cost pools. Activity Cost Pools Purchasing Estimated Use of Cost Drivers Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Cost Drivers Number of orders Number of moves 600 8,000 Direct labor hours 100,000 Number of setups 1,250 Number of inspections 6,000 Number of components 168,000 Square feet occupied 90,000 P4.3A (LO 1, 2), AN Writing Shaker Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) per- mit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manu- facturing overhead costs for the year 2020 are as follows. Amount $ 75,000 Assign overhead costs using traditional costing and ABC; compare results. Overhead Cost Pools Purchasing Handling materials 82,000 Production (cutting, milling, finishing) 210,000 Setting up machines 105,000 Inspecting 90,000 Inventory control (raw materials and finished goods) 126,000 Utilities 180,000 Total budgeted overhead costs $868,000 For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2020, 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 pre- viously budgeted overhead cost pools. Activity Cost Pools Purchasing Estimated Use of Cost Drivers Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Cost Drivers Number of orders Number of moves 600 8,000 Direct labor hours 100,000 Number of setups 1,250 Number of inspections 6,000 Number of components 168,000 Square feet occupied 90,000