Problem 17-3A Shaker Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, handrails) permit installation of stairways of varying lengths and widths. All are of white cak wood. Budgeted manufacturing overhead costs for the year 2017 are as follows. Overhead Cost Pools Purchasing Handling materials Production (cutting, miling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Amount $74,400 82.400 216,000 101,250 108,000 137,760 270,000 $999.910 For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2017, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Shaker Stairs Co., recently directed accountant, il segrer, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nola request, Bill and the production foreman Identify the following cost drivers and their usage for the previously budgeted overhead cost pools Expected Use of Cost Drivers B,000 100,000 Activity Cost Pools Purchasing 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 Direct labor hours Number of setups Number of inspections Number of components Square feet occupied 6,000 168,000 90.000 Save annon, sales manager, has received an order for 250 ways from Community Builders, Inc, a large housing development contractor At Steve's requests prepares cost estimates for producing components for 250 staways so Steve can submit a contract price per stairway to community Builders. He accumulates the following data for the production of 250 stairways. $103.900 $112,500 14,700 5,500 Direct material 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 16,000 3.000 Compute the predetermined overhead rate using traditional costing with machine hours as the basis (Round answer to 2 decimal places, ... 12.25.) Predetermined overhead rate per machine hour What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, ... 12.25.) Cost per stairways Calculate activity based overhead rate for each activity (Round answers to 2 decimal places, s. 12.25.) Activity Overhead Rate Purchasing per order Handling materials per move Production per D/L hour Setting up machines per setup Inspecting per inspection Inventory control per component Utilities per sit Caluciate total overhead assigned under ABC Total overhead assigned What is the manufacturing cost per stairway under the proposed activity based costing? (Round answer to 2 decimal places, e.g. 12.25.) Total cost per stairway Click if you would like to show Work for this question: Doen Show Work
