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✓ Your answer is correct. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, eg. 12.25.) Predetermined overhead rate $ (b) eTextbook and Medial ✓ Your answer is correct. Cost per stairway $ What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.) eTextbook and Media (c1) ✓ Your answer is correct. Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Purchasing Activity Handling materials $ Production Setting up machines Inspecting Inventory control Utilities (c2) $ $ Total overhead assigned $ (C3) $ eTextbook and Media $ $ ✓ Your answer is correct. 1499.44 Calculate total overhead assigned under ABC. eTextbook and Media Overhead Rate 125.00 Total manufacturing cost per stairway $ 10.25 2.20 84.00 18.00 0.75 9.86 per machine hour 3.00 80,300 per order per move per D/L hour per setup per inspection per component Attempts: 1 of 5 used per sq. ft. Attempts: 1 of 5 used Attempts: 1 of 5 used Attempts: 2 of 5 used What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g. 12.25.)

✓ Your answer is correct. Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, eg. 12.25.) Predetermined overhead rate $ (b) eTextbook and Medial ✓ Your answer is correct. Cost per stairway $ What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.) eTextbook and Media (c1) ✓ Your answer is correct. Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Purchasing Activity Handling materials $ Production Setting up machines Inspecting Inventory control Utilities (c2) $ $ Total overhead assigned $ (C3) $ eTextbook and Media $ $ ✓ Your answer is correct. 1499.44 Calculate total overhead assigned under ABC. eTextbook and Media Overhead Rate 125.00 Total manufacturing cost per stairway $ 10.25 2.20 84.00 18.00 0.75 9.86 per machine hour 3.00 80,300 per order per move per D/L hour per setup per inspection per component Attempts: 1 of 5 used per sq. ft. Attempts: 1 of 5 used Attempts: 1 of 5 used Attempts: 2 of 5 used What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g. 12.25.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Manufacturing Overhead Cost Calculation #### Traditional Costing Method **Step 1: Predetermined Overhead Rate Calculation** *Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round the answer to 2 decimal places, e.g., 12.25):* **Predetermined overhead rate:** $9.86 per machine hour. * This calculation involves estimating the total manufacturing overhead costs and dividing by an estimated allocation base, such as total machine hours. #### Cost Calculation per Stairway under Traditional Costing **Step 2: Manufacturing Cost per Stairway** *What is the manufacturing cost per stairway under traditional costing? (Round the answer to 2 decimal places, e.g., 12.25):* **Cost per stairway:** $1,499.44 * This result involves applying the predetermined overhead rate to the actual allocation base (e.g., machine hours used for producing one stairway) to determine the cost. #### Activity-Based Costing (ABC) Method **Step 1: Overhead Rate for Each Activity** *Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g., 12.25):* | **Activity** | **Overhead Rate** | |-------------------------|---------------------------| | Purchasing | $125.00 per order | | Handling materials | $10.25 per move | | Production | $2.20 per D/L hour | | Setting up machines | $84.00 per setup | | Inspecting | $18.00 per inspection | | Inventory control | $0.75 per component | | Utilities | $3.00 per sq. ft. | * These calculations determine the cost associated with each activity by dividing the estimated overhead costs for each activity by the expected activity level. **Step 2: Total Overhead Assigned** *Calculate total overhead assigned under ABC.* **Total overhead assigned:** $80,300 * This total is the sum of all costs assigned to each activity, showing the more refined allocation of overhead under the ABC method. **Step 3: Manufacturing Cost per Stairway under ABC** *What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g., 12.25):* **Total manufacturing cost per stairway:** * This result is
Transcribed Image Text:### Manufacturing Overhead Cost Calculation #### Traditional Costing Method **Step 1: Predetermined Overhead Rate Calculation** *Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round the answer to 2 decimal places, e.g., 12.25):* **Predetermined overhead rate:** $9.86 per machine hour. * This calculation involves estimating the total manufacturing overhead costs and dividing by an estimated allocation base, such as total machine hours. #### Cost Calculation per Stairway under Traditional Costing **Step 2: Manufacturing Cost per Stairway** *What is the manufacturing cost per stairway under traditional costing? (Round the answer to 2 decimal places, e.g., 12.25):* **Cost per stairway:** $1,499.44 * This result involves applying the predetermined overhead rate to the actual allocation base (e.g., machine hours used for producing one stairway) to determine the cost. #### Activity-Based Costing (ABC) Method **Step 1: Overhead Rate for Each Activity** *Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g., 12.25):* | **Activity** | **Overhead Rate** | |-------------------------|---------------------------| | Purchasing | $125.00 per order | | Handling materials | $10.25 per move | | Production | $2.20 per D/L hour | | Setting up machines | $84.00 per setup | | Inspecting | $18.00 per inspection | | Inventory control | $0.75 per component | | Utilities | $3.00 per sq. ft. | * These calculations determine the cost associated with each activity by dividing the estimated overhead costs for each activity by the expected activity level. **Step 2: Total Overhead Assigned** *Calculate total overhead assigned under ABC.* **Total overhead assigned:** $80,300 * This total is the sum of all costs assigned to each activity, showing the more refined allocation of overhead under the ABC method. **Step 3: Manufacturing Cost per Stairway under ABC** *What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g., 12.25):* **Total manufacturing cost per stairway:** * This result is
**Oriole Stairs Co. Manufacturing Overhead Costs Analysis for 2025** Oriole Stairs Co. specializes in designing and building factory-made premium wooden stairways for residential homes. The stairways consist of various manufactured components (spindles, risers, hangers, handrails) allowing the installation of stairways of different lengths and widths, all made from white oak wood. Below is the budgeted manufacturing overhead costs for the year 2025. ### Budgeted Overhead Costs for 2025 | Overhead Cost Pools | Amount | |--------------------------------------------------|----------| | Purchasing | $75,000 | | Handling materials | $82,000 | | Production (cutting, milling, finishing) | $220,000 | | Setting up machines | $105,000 | | Inspecting | $108,000 | | Inventory control (raw materials and finished goods) | $126,000 | | Utilities | $270,000 | | **Total budgeted overhead costs** | **$986,000** | For the past 4 years, Oriole Stairs Co. has allocated overhead costs to products based on machine hours. For the year 2025, the budgeted machine hours are 100,000. Jeremy Nolan, the owner-manager of Oriole Stairs Co., recently directed his accountant, Bill Seagren, to implement activity-based costing (ABC) which he has been suggesting over the years. At Jeremy Nolan’s request, Bill along with the production foreman have identified the following cost drivers and their estimated usage for the overhead cost pools budgeted previously. ### Estimated Use of Cost Drivers | Activity Cost Pools | Cost Drivers | Estimated Use of 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 | ### Order Cost Estimation Steve H
Transcribed Image Text:**Oriole Stairs Co. Manufacturing Overhead Costs Analysis for 2025** Oriole Stairs Co. specializes in designing and building factory-made premium wooden stairways for residential homes. The stairways consist of various manufactured components (spindles, risers, hangers, handrails) allowing the installation of stairways of different lengths and widths, all made from white oak wood. Below is the budgeted manufacturing overhead costs for the year 2025. ### Budgeted Overhead Costs for 2025 | Overhead Cost Pools | Amount | |--------------------------------------------------|----------| | Purchasing | $75,000 | | Handling materials | $82,000 | | Production (cutting, milling, finishing) | $220,000 | | Setting up machines | $105,000 | | Inspecting | $108,000 | | Inventory control (raw materials and finished goods) | $126,000 | | Utilities | $270,000 | | **Total budgeted overhead costs** | **$986,000** | For the past 4 years, Oriole Stairs Co. has allocated overhead costs to products based on machine hours. For the year 2025, the budgeted machine hours are 100,000. Jeremy Nolan, the owner-manager of Oriole Stairs Co., recently directed his accountant, Bill Seagren, to implement activity-based costing (ABC) which he has been suggesting over the years. At Jeremy Nolan’s request, Bill along with the production foreman have identified the following cost drivers and their estimated usage for the overhead cost pools budgeted previously. ### Estimated Use of Cost Drivers | Activity Cost Pools | Cost Drivers | Estimated Use of 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 | ### Order Cost Estimation Steve H
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