Exercise 2: (Ch7 ABC) Bella Clear Windows designs and builds custom windows for luxury homes. Most of the windows are cu

[answerhappygod]

Exercise 2 Ch7 Abc Bella Clear Windows Designs And Builds Custom Windows For Luxury Homes Most Of The Windows Are Cu 1 (54.29 KiB) Viewed 9 times

Exercise 2: (Ch7 ABC) Bella Clear Windows designs and builds custom windows for luxury homes. Most of the windows are custom made but occasionally the company does mass production on order. Its budgeted manufacturing overhead costs for the year 2014 are as follows: Amount Overhead Cost Pools $ 26,000 Purchasing Production (cutting, milling, finishing) Setting up machines 65,000 Inspecting Utilities 35,000 75.000 Total budget overhead costs $377,000 For the last three years, the company has been allocating overhead to products on the basis of machine hours. For the year 2014, 20,000 machine hours are budgeted. Drivers The operations manager of Bella Clear recently directed her accountant to implement the activity-based costing system she has repeatedly proposed. The accountant and production foreman identified the following cost drivers and their usage for the previously budgeted overhead cost pools: Overhead Cost Pools Total Activity Number of orders Purchasing Production (cutting, milling, finishing) Direct labor hours 16,000 Setting up machines Number of setups 250 Inspecting Number of inspections 1,250 Utilities Square feet occupied 15,000 Direct materials Direct labor Machine hours Direct labor hours 2,100 Number of purchase orders Number of machine setups 12 Number of inspections Number of square feet occupied $22,000 176,000 During this month, the company received an order for 80 windows from a housing development contractor. The accountant prepared cost estimates for producing components for 80 windows to submit a contract price per window set to the contractor. The following data for the production of 80 windows is accumulated: Activity Cost 80 $23,100 1,600 8 15 1,200 Required: (a) Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (b) Compute the manufacturing cost per window under (c) traditional costing. Compute the manufacturing cost per window under the proposed activity-based costing system