Problem 4-3A Shaker Stairs Co. designs and builds factory-made premium wooden st

Question

Problem 4-3A Shaker 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 2017 are as BACK NEXT follows. Overhead Cost Pools Amount Purchasing $74,400 82,720 212,000 101,250 96,000 137,760 450,000 1,154,130 Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of m budgeted achine hours. For the year 2017, 100,000 machine hours are Jeremy Nolan, owner-manager of Shaker Stairs Co., recently directed his accountant, Bil Seagren, to implement the 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

Explanation / Answer

Answer a. Traditional Costing Predetermined Overhead Rate = $1,154,130 (Total Overhead) / 100,000 Mach. Hrs Predetermined Overhead Rate = $11.5413 per Mach. Hr. Answer b. Caculation of Unit Cost Under Traditional Costing Amount Direct Material                      103,900.00 Direct Labor                      113,000.00 Overhead - 14,900 Mach Hrs X $11.5413                      171,965.37 Total Cost                      388,865.37 No. of Stairways Produced                                     250 Cost Per Stairway                           1,555.46 Answer c. ABC Costing Activity Overhead Cost Driver Quantity Allocation Rate Purchasing                               74,400                                     600 Orders                  124.00 Per order Handling Materials                               82,720                                 8,000 moves                     10.34 Per move Production (cutting, milling, finishing)                            212,000                            100,000 Lab Hrs                       2.12 Per Lab Hr. Setting up machines                            101,250                                 1,250 Setups                     81.00 Per setup Inspecting                               96,000                                 6,000 Inspections                     16.00 Per Inspection Inventory control (raw materials and finished goods)                            137,760                            168,000 components                       0.82 per component Utilities                            450,000                               90,000 Square Feet                       5.00 per sq feet Total                         1,154,130 Answer d. Assigning Overhead Cost Using ABC Method Activity Based Overhead Rate Cost Driver Incurred OH Allocated Purchasing                               124.00 Per order                             60 Orders                7,440.00 Handling Materials                                 10.34 Per move                          800 moves                8,272.00 Production (cutting, milling, finishing)                                   2.12 Per Lab Hr.                       5,500 Lab Hrs             11,660.00 Setting up machines                                 81.00 Per setup                          100 Setups                8,100.00 Inspecting                                 16.00 Per Inspection                          450 Inspections                7,200.00 Inventory control (raw materials and finished goods)                                   0.82 per component                    16,000 components             13,120.00 Utilities                                   5.00 per sq feet                       8,000 Square Feet             40,000.00 Total             95,792.00

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.