Please show your calculations!
Stellar Stairs Co. designs and builds factory-made premium wooden stairs for homes. The manufactured stair components (spindles, risers, hangers, hand rails) permit installation of stairs of varying lengths and widths. All are made of white oak wood. The company's budgeted manufacturing overhead costs for 2016 are as follows: Overhead Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budget overhead costs Amount $69,000 82,000 210,000 95,000 90,000 126,000 180,000 $852,000 For the last four years, Stellar 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, Kiko Nishikawa, to implement the activity-based costing system that she has repeatedly proposed. At Heather Fujar's request, Kiko and the production foreperson identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Cost Drivers Number of orders Number of moves Expected Use of Cost Drivers 600 8,080 Activity Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Direct labour hours Number of set-ups Number of inspections 104,440 1,530 6,340 Number of components Square metres occupied 171,620 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 stair to Community Builders. She accumulates the following data for the production of 280 stairways: Direct materials Direct labour Machine hours Direct labour hours Number of purchase orders Number of material moves Number of machine set-ups Number of inspections Number of components Number of square metres occupied $103,600 112,000 14,500 5,000 60 800 100 450 16,000 800 (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 LINK TO TEXT LINK TO TEXT Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 15.25.) Manufacturing cost per stairway LINK TO TEXT LINK TO TEXT Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER 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 LINK TO TEXT LINK TO TEXT Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER (d) Which of the two costing systems is preferable in pricing decisions
