Thakin 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 2014 are as follows. Overhead Cost Pools Amount Purchasing $ 69,000 Handling materials 82,560 Production (cutting, milling, finishing) 219,000 Setting up machines 101,250 Inspecting 108,000 Inventory control (raw materials and finished goods) 139,440 Utilities 360,000 Total budget overhead costs $1,079,250 For the last 4 years, Thakin Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2014, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Thakin 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. Activity Cost Pools Cost Drivers Expected Use of Cost Drivers Purchasing Number of orders 600 Handling materials Number of moves 8,000 Production (cutting, milling, finishing) Direct labor hours 100,000 Setting up machines Number of setups 1,250 Inspecting Number of inspections 6,000 Inventory control (raw materials and finished goods) Number of components 168,000 Utilities Square feet occupied 90,000 Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steves 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 $103,900 Direct labor $112,300 Machine hours 14,700 Direct labor hours 5,600 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 Collapse question part (a) Correct answer. Your answer is correct. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answers to 2 decimal places, e.g. $12.25.) Predetermined overhead rate $Entry field with correct answer 10.79 per machine hour Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO VIDEO Attempts: 1 of 3 used Collapse question part (b) Correct answer. Your answer is correct. What is the manufacturing cost per stairway under traditional costing? (Round answers to 2 decimal places, e.g. $12.25.) Cost per stairway $Entry field with correct answer 1,499.252 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO VIDEO Attempts: 1 of 3 used Collapse question part (c1) Correct answer. Your answer is correct. Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. $12.25.) Activity Overhead Rate Purchasing $Entry field with correct answer 115 per order Handling materials $Entry field with correct answer 10.32 per move Production $Entry field with correct answer 2.19 per D/L hour Setting up machines $Entry field with correct answer 81 per setup Inspecting $Entry field with correct answer 18 per inspection Inventory control $Entry field with correct answer 0.83 per component Utilities $Entry field with correct answer 4 per sq. ft. Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO VIDEO Attempts: 1 of 3 used Collapse question part (c2) Caluclate total overhead assigned under ABC. Total overhead assigned $