Sterling Industries produces machine parts as a contract provider for a large manufacturing company. Sterling produces two particular parts, shafts and gears. The competition is keen among contract producers, and Sterlings top management realizes how vulnerable its market is to cost-cutting competitors. Hence, having a very accurate understanding of costs is important to Sterlings survival.
Sterlings president, Sheila Hudson, has observed that the companys current cost to produce shafts is $56.04, and the current cost to produce gears is $34.32. She indicated to the controller that she suspects some problems with the cost system because Sterling is suddenly experiencing extraordinary competition on shafts, but it seems to have a virtual corner on the gears market. She is even considering dropping the shaft line and converting the company to a one-product manufacturer of gears. She asked the controller, George Coleman, to conduct a thorough cost study and to consider whether changes in the cost system are necessary. The controller collected the following data about the companys costs and various manufacturing activities for the most recent month:

Shafts Gears 50.000.000 20 10.00 15.00 12604 20 Production units seling price Overeadornate on receber Watanak anda per un Number of production run Maandeling besar Number machine Mather Number of engineering Name of a moves 1000 2.500 25.000 00 2.500 2500 33 The controller was able to summarize the company's total manufacturing overhed into the following pool 5 COSES 500.000 Machine.com 425,200 Purchung des 02200 Enging 501.500 Matershados 1291 Total 31,770.000 Required Number of material moves 33 The controller was able to summarize the company's total manufacturing overhead into the following pools: Setup COSE Machine cos Purchasing and Enging out Manerbanding Total 590.000 475200 521220 sot. 17 31.770,000 Required Calculate Sterlings current plantwide overhead rate based on direct labor hours 50 per direct labor hour b. Verily Sterinus calculation of overhead cost per unit of 520 och for shafts and $15.00 for goors Shalts 50 150,000 unds $30.00 per unit Gears $0 18.000 $15.00 per unit c. Calculate the manufacturing overhead cost in total and per un for shafts and gears using activity based costine assuming each of the five contpoolt represents a separate activity the most appropriate activity driver for assigning activity costs to the two products 50 logo 130.00 per unit 1000 perunt cate the manufacturing and for thats and party based on the time contpoor wat vit podle me proprie for you to the two proces Note on your west was Share Geen Coot that Were con Nest OP AM QD Shafts Gears 50.000.000 20 10.00 15.00 12604 20 Production units seling price Overeadornate on receber Watanak anda per un Number of production run Maandeling besar Number machine Mather Number of engineering Name of a moves 1000 2.500 25.000 00 2.500 2500 33 The controller was able to summarize the company's total manufacturing overhed into the following pool 5 COSES 500.000 Machine.com 425,200 Purchung des 02200 Enging 501.500 Matershados 1291 Total 31,770.000 Required Number of material moves 33 The controller was able to summarize the company's total manufacturing overhead into the following pools: Setup COSE Machine cos Purchasing and Enging out Manerbanding Total 590.000 475200 521220 sot. 17 31.770,000 Required Calculate Sterlings current plantwide overhead rate based on direct labor hours 50 per direct labor hour b. Verily Sterinus calculation of overhead cost per unit of 520 och for shafts and $15.00 for goors Shalts 50 150,000 unds $30.00 per unit Gears $0 18.000 $15.00 per unit c. Calculate the manufacturing overhead cost in total and per un for shafts and gears using activity based costine assuming each of the five contpoolt represents a separate activity the most appropriate activity driver for assigning activity costs to the two products 50 logo 130.00 per unit 1000 perunt cate the manufacturing and for thats and party based on the time contpoor wat vit podle me proprie for you to the two proces Note on your west was Share Geen Coot that Were con Nest OP AM QD