Tour #1:  Coffman Stairs, LLC

Rating: ****

Company Overview: Coffman Stairs is a manufacturer of hardwood stair parts, such as handrails, posts, and balusters.

Managerial Accounting Topic(s): Allocation of overhead

Web Site: http://www.coffmanstairs.com/

To Learn More about the Company: From the home page, click on the following links:

1. About Coffman - Read about the company and what it does.
2. About Coffman and then The Coffman Plant Tour - Learn more about the company's manufacturing process by viewing this slide presentation.
3. About Coffman and then The Coffman History and Plant Tour - Learn more about the company by viewing this video presentation (which takes forever to load, but is worth it).

Discussion Questions:  Assume that Coffman uses direct labor, the most common cost drive, to allocate overhead costs under traditional costing.

1. What are the likely manufacturing overhead costs incurred by Coffman Stairs?
2. How appropriate is the use of direct labor hours as the cost driver for the allocation of overhead?
3. What alternative allocation bases could be used to allocate overhead? Which would you recommend to Coffman?