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Use below information for Questions 5 to 6 : Luxury Furniture designs and builds factory - made, premium, wood armoires for homes. All are of
Use below information for Questions to :
Luxury Furniture designs and builds factorymade, premium, wood armoires for homes. All are of white oak. Its budgeted MOH costs for the year are as follows.
tableOverhead Cost Pools,Amont $PurchasingHandling materials,Production cutting milling, finishingSetting up machines,InspectingInventory control raw materials and finished goodstilities
For the last years, Luxury Furniture has been charging overhead to products on the basis of materials cost. For the year materials cost of $ were budgeted. Jim Brigham, ownermanager of Luxury Furniture, recently directed his accountant, Bob Borke, to implement the ABC system that he has repeatedly proposed. At Jim Brigham's request, Bob and the production foreman identify the following cost drivers and their usage for the previously budgeted MOH cost pools.
tableOverhead Cost Pools,Activity Cost Drivers,Expected Use of Cost DriversPurchasingNumber of orders,Handling materials,Number of moves,Production cutting milling, finishingDirect labor hours,Setting up machines,Number of setups,InspectingNumber of inspections,Inventory control raw materials and finished goodsNumber of components,UtilitiesSquare feet occupied,
Debbie Steiner, sales manager, has received an order for luxury armoires from Thom's Interior Design. At Debbie's request, Bob prepares cost estimates for producing armoires so Debbie can submit a contract price per armoire to Thom's. He accumulates the following data for the production of armoires.
tableDM Cost $DL Cast $DL Hours,Number of Purchase Orders,Number of Materials Moves,Number of Machine Setups,Number of Inspections,Number of Components,Number of Square Feet Occupied,
Q What is the unit manufacturing cost per armoire under traditional costing?
Q What is the unit manufacturing cost per armoire under the proposed activitybased costing?
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