QUESTION 4 Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve's request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways. Direct materials $103,600 Direct labor $112,000 Machine hours 14,500 Direct labor hours 5,000 Number of purchase orders 60 Number of material moves 800 Number of machine setups 100 Number of inspections 450 Number of components 16,000 Number of square feet occupied 8,000 INSTRUCTIONS A. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. B. What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.) C. What is the manufacturing cost per stairway under the proposed ACTIVITY-BASED COSTING? (Round to the nearest cent. Prepare all of the necessary schedules.) D. Which of the two costing systems is preferable in pricing decisions and why? QUESTION 4 Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve's request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways. Direct materials $103,600 Direct labor $112,000 Machine hours 14,500 Direct labor hours 5,000 Number of purchase orders 60 Number of material moves 800 Number of machine setups 100 Number of inspections 450 Number of components 16,000 Number of square feet occupied 8,000 INSTRUCTIONS A. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. B. What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.) C. What is the manufacturing cost per stairway under the proposed ACTIVITY-BASED COSTING? (Round to the nearest cent. Prepare all of the necessary schedules.) D. Which of the two costing systems is preferable in pricing decisions and why