sign overhead coming traditional contine and ABC.com real e. Are management's future plans for the two models sound? Explain P43A (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 nails) per mit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted mano facturing overhead costs for the year 2020 are as follows. Overhead Cost Pools Amount Purchasing $ 75,000 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 5868,000 For the las 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. Al 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. Estimated Use of Activity Cost Pools Cost Drivers Cost Drivers Purchasing Number of orders Handling materials Number of mores 8,000 Production fcutting, milling finishing Direct labor hours 100.000 Number of setur 1.250 Setting up machines 6.000 Number of inspections Inspecting Inventory control raw materials and finished goods Number of components titie Square feet occupied 442 CHAPTER 4 Activity-Based Costing Steve Hannos, sales manager, has received an order for 250 stairway from Community Builders Inc, large housing development Contractor At Steve' s Bell prepares cost estimates for doxing components for 250 airways so Steve con su contact price per star to Com Builders. He accumulates the following data for the production of 250 S103.600 S112.000 14.500 5.000 Direct materials 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 b. Costistaitway 51,365.84 Cost,stairway $1,139,50 Instructions a. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. b. What is the manufacturing cost per stairiay under traditional costing? (Round to the nearest cet) 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 acting systems is preferable in pricing decisions and why