$1.00 Week 3 Team Problem
- From Business: Accounting , Business: Finance
- Closed, but you can still post tutorials
- Due on Jul. 07, 2012
- Asked on Jul 06, 2012 at 7:11:25PM
P4-3A Skaros Stairs Co. of Moore 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 2011 are as follows.
|
Overhead Cost Pools |
|
Amount |
|
Purchasing |
|
$ 57,000 |
|
Handling materials |
|
82,000 |
|
Production (cutting, milling, finishing) |
|
210,000 |
|
Setting up machines |
|
85,000 |
|
Inspecting |
|
90,000 |
|
Inventory control (raw materials and finished goods) |
|
126,000 |
|
Utilities |
|
180,000 |
|
Total budget overhead costs |
|
$830,000 |
For the last 4 years, Skaros Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2011, 100,000 machine hours are budgeted. Anthony Morse, owner-manager of Skaros Stairs Co., recently directed his accountant, Neal Seagren, to implement the activity-based costing system that he has repeatedly proposed. At Anthony Morse’s request, Neal and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.
|
|
|
|
|
Expected |
|
|
|
|
|
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 |
David Hannon, sales manager, has received an order for 280 stairways from Community Builders, Inc., a large housing development contractor. At David’s request, Neal prepares cost estimates for producing components for 280 stairways so David can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 280 stairways.
|
Direct materials |
|
$103,600 |
|
Direct labor |
|
$112,000 |
|
Machine hours |
|
14,500 |
|
Direct labor hours |
|
5,000 |
|
Number of purchase orders |
|
60 |
|
Number of material moves |
|
800 |
|
Number of machine setups |
|
100 |
|
Number of inspections |
|
450 |
|
Number of components |
|
16,000 |
|
Number of square feet occupied |
|
8,000 |
Instructions
(a) Compute the predetermined overhead rate using traditional costing with machine hours as the basis.
(b) What is the manufacturing cost per stairway under traditional costing? (Round to the nearest cent.)
(c) What is the manufacturing cost per stairway under the proposed activity-based costing? (Round to the nearest cent. Prepare all of the necessary schedules.)
(d) Which of the two costing systems is preferable in pricing decisions and why?
- This tutorial was purchased 5 times and rated A+ by students like you.
- Posted on Jul 06, 2012 at 7:46:44PM
P4-3A Skaros Stairs Co.doc (327K) - This tutorial hasn't been purchased yet.
- Posted on Jul. 24, 2012 at 04:24:23AM
Rating (243):A+
Questions Asked: 0
Tutorials Posted: 3438,
Blog Posts: 2,
Earned: $30,248.89
Attachments:
Acc349 P4-3A Skaros Stairs Co. of Moore designs and builds factory-made premium wooden stairways.xlsx (15K)
Acc349 P4-3A Skaros Stairs Co. of Moore designs and builds factory-made premium wooden stairways.xls (30K)
- This tutorial was purchased 1 time and rated No Rating by students like you.
- Posted on Aug. 26, 2012 at 01:36:47AM
Attachments:
skaros stairs solution.xlsx (12K)
- This tutorial hasn't been purchased yet.
- Posted on May 07, 2013 at 12:10:27PM
Attachments:
P4-3A Skaros Stairs Co. of Moore designs and builds.xlsx (11K)