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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 $ per machine hour

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 $ per machine hour

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Oriole 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 2025 are as follows. Overhead Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Activity Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities 450 Amount $75,000 82,000 220,000 16,000 105.000 For the last 4 years, Oriole Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2025, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Oriole 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. 8,000 108,000 126,000 270,000 $986,000 Cost Drivers Number of orders Number of moves Direct labor hours Number of setups Number of inspections Number of components Square feet occupied Estimated Use of Cost Drivers 600 8,000 100,000 1,250 6,000 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 stairwat Direct materials $104,100 Direct labor $113,000 Machine hours 16,000 Direct labor hours 5,500 11 Number of purchase orders 60 Number of material moves 800 Number of machine setups 100 Number of inspections Number of components Number of square feet occupied 168,000 90,000
Transcribed Image Text:Oriole 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 2025 are as follows. Overhead Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Activity Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities 450 Amount $75,000 82,000 220,000 16,000 105.000 For the last 4 years, Oriole Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2025, 100,000 machine hours are budgeted. Jeremy Nolan, owner-manager of Oriole 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. 8,000 108,000 126,000 270,000 $986,000 Cost Drivers Number of orders Number of moves Direct labor hours Number of setups Number of inspections Number of components Square feet occupied Estimated Use of Cost Drivers 600 8,000 100,000 1,250 6,000 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 stairwat Direct materials $104,100 Direct labor $113,000 Machine hours 16,000 Direct labor hours 5,500 11 Number of purchase orders 60 Number of material moves 800 Number of machine setups 100 Number of inspections Number of components Number of square feet occupied 168,000 90,000
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 $ per machine hour
Transcribed Image Text: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 $ per machine hour
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