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For the last 4 years, Sunland Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2022, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Sunland Stairs Co., recently directed his accountant, Bill Seagren, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolan's request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Estimated Use of Activity Cost Pools Cost Drivers 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 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 $104,200 $112,700 Direct labor Machine hours 15,000 Direct labor hours 5,700 Number of purchase orders. 60 Number of material moves Number of machine setups Number of inspections Number of components Number of square feet occupied - 800 100 450 16,000 8,000
Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate $ 9.93 per machine hour
What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.) Cost per stairway 1,463.40
Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Activity Overhead Rate Purchasing 125 per order Handling materials $ 10.25 per move Production $ 2.20 per D/L hour Setting up machines $ 80 per setup Inspecting 20 per inspection Inventory control $ 75 per component Utilities 3 per sq. ft.
Your answer is incorrect. Calculate total overhead assigned under ABC. Total overhead assigned $ Save for Later Last saved 1 second ago. Saved work will be auto-submitted on the due date. Auto- submission can take up to 10 minutes. Using multiple attempts will impact your score. 10% score reduction after attempt 2 Attempts: 2 of 3 used Submit Answer