Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white oak....

 

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Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white oak. Its budgeted MOH costs for the year 2017 are as follows Overhead Cost Pools Purchasing Handling materials Amont ($) 42,000 50.000 Production (cutting, milling, finishing) 135,000 Setting up machines 85,000 Inspecting 60,000 Inventory control (raw materials and finished goods) Utilities 84,000 100,000 For the last 4 years, Luxury Furniture has been charging overhead to products on the basis of materials cost. For the year 2017, materials cost of $520,000 were budgeted. Jim Brigham, owner-manager of Luxury Furniture, recently directed his accountant, Bob Borke, to implement the ABC system that he has repeatedly proposed. At Jim Brigham's request, Bob and the production foreman identify the following cost drivers and their usage for the previously budgeted MOH cost pools. Overhead Cost Pools Purchasing Handling materials Activity Cost Drivers Expected Use of Cost Drivers Number of orders 500 Number of moves 5,200 Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Direct labor hours Number of setups Number of inspections Number of components Square feet occupied 65,000 1,500 4,900 40,000 54,000 Debbie Steiner, sales manager, has received an order for 15 luxury armoires from Thom's Interior Design. At Debbie's request, Bob prepares cost estimates for producing 15 armoires so Debbie can submit a contract price per armoire to Thom's. He accumulates the following data for the production of 15 armoires. Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white oak. Its budgeted MOH costs for the year 2017 are as follows Overhead Cost Pools Purchasing Handling materials Amont ($) 42,000 50.000 Production (cutting, milling, finishing) 135,000 Setting up machines 85,000 Inspecting 60,000 Inventory control (raw materials and finished goods) Utilities 84,000 100,000 For the last 4 years, Luxury Furniture has been charging overhead to products on the basis of materials cost. For the year 2017, materials cost of $520,000 were budgeted. Jim Brigham, owner-manager of Luxury Furniture, recently directed his accountant, Bob Borke, to implement the ABC system that he has repeatedly proposed. At Jim Brigham's request, Bob and the production foreman identify the following cost drivers and their usage for the previously budgeted MOH cost pools. Overhead Cost Pools Purchasing Handling materials Activity Cost Drivers Expected Use of Cost Drivers Number of orders 500 Number of moves 5,200 Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Direct labor hours Number of setups Number of inspections Number of components Square feet occupied 65,000 1,500 4,900 40,000 54,000 Debbie Steiner, sales manager, has received an order for 15 luxury armoires from Thom's Interior Design. At Debbie's request, Bob prepares cost estimates for producing 15 armoires so Debbie can submit a contract price per armoire to Thom's. He accumulates the following data for the production of 15 armoires.

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Answer To calculate the cost estimates for producing 15 armoires using the ABC system we need to allocate the overhead costs based on the activity cos... View the full answer