Shaker Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2017 are as follows.

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 his accountant, Bill Seagren, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolans request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.

1. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, e.g. 12.25.)

Pre-determined overhead rate:

2-5 below:

Overhead Cost Pools Amount Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities $74,400 82,720 214,000 103,750 96,000 141,120 360,000 $1,071,990 Total budgeted overhead costs Expected Use of Cost Drivers Cost Drivers Number of orders 600 Number of moves Direct labor hours Activity Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Number of setups Number of inspections Number of components Square feet occupied 8,000 100,000 1,250 6,000 168,000 90,000 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 Direct labor $103,900 $113,100 14,600 5,400 Machine hours Direct labor hours 60 Number of purchase orders Number of material moves 800 100 450 Number of machine setups Number of inspections Number of components Number of square feet occupied 16,000 8,000 What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.) Cost per stairways Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. 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 sq. ft. $ LINK TO TEXT LINK TO TEXT Caluclate total overhead assigned under ABC. Total overhead assigned $ LINK TO TEXT LINK TO TEXT 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