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    Overhead Costs with Traditional Costing on Stellar Stairs

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    Overhead costs using traditional costing and ABC.

    (See attached file for full problem description)

    (a) Predetermined...

    $xxx ÷ xxx hrs. = $xx.xx per machine hour

    (b) Manufacturing cost per stair under traditional costing:

    Direct materials $xxx,000
    Direct labor  xxx,000
    Overhead (xxx X $xxx)  xxx,350
    Total cost of 280 stairs $xxx,950

    Cost per stair ($xxx ÷ 280)  $1,199.82

    (c) Manufacturing cost per stair under activity-based costing:

    Computation of Activity-Based Overhead Rate

    Activity Cost Pool Estimated
    Overhead
    ÷ Total
    Estimated Drivers
    = Activity-Based
    Overhead Rate

    Purchasing
    Handling materials
    Production
    Setting up machines
    Inspecting
    Inventory control
    Utilities $  xxx
       xxx
       xxx
       xxx
       xxx
       xxx
       xxx
    $830,000     600 Orders
      8,000 Moves
    100,000 D/L Hours
      1,250 Setups
      6,000 Inspections
     168,000 Components
     90,000 Sq. ft. $xx per order
    $xx.xx per move
    $x.xx per D/L hour
    $xx per setup
    $xx per inspection
    $.xx per component
    $x per sq. ft.

    Assignment of Overhead to Order of 280 Stairs

    Activity Cost Pool Expected
    Use of Driver
    X Activity-Based
    Overhead Rate
    =
    Cost Assigned

    Purchasing
    Handling materials
    Production
    Setting up machines
    Inspecting
    Inventory control
    Utilities     60 Orders
       800 Moves
    5,000 D/L Hours
       100 Setups
       450 Inspections
     16,000 Components
     8,000 Sq. ft. $xx
    $xx.xx
    $x.xx
    $xx
    $xx
    $.xx
    $x $  xxx
      xxx
      xxx
      xxx
      xxx
      xxx
      xxx
    Total overhead assigned $65,950

    Chapter 4 Problem 4-3A (Continued)

    Total manufacturing cost per stair under ABC:

    Direct materials $  xxx
    Direct labor    xxx
    Overhead    xxx
    Total cost of 280 stairs $  281,550

    Total cost per stair $xxx

    (d) The difference between the traditional cost and the activity-based cost per unit of $xxx or ($xxx vs. $xxx) is not great in amount but?xx.3%...

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    https://brainmass.com/economics/labour-economics/overhead-costs-traditional-costing-stellar-stairs-85715

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    Solution Summary

    The solution has the activity based costing solution for Stellar Stairs.

    $2.19