Calculate the manufacturing overhead cost per metal casement

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Reference no: EM132459466

Two-Stage ABC for Manufacturing

Merlot Company has determined its activity cost pools and cost drivers to be the following:

  1. Cost PoolsSetup$59,500Material handling16,000Machine operation300,000Packing60,000Total indirect manufacturing costs$435,500
  2. Cost driversSetups350Material moves640Machine hours20,000Packing orders1,000

One product made by Merlot, metal casements, used the following activities during the period to produce 500 units:

Setups20Material moves80Machine hours1,900Packing orders150 and this is what I did:

Problem a. Calculate the cost per unit of activity for each activity cost pool for Merlot Company.

Setup costsAnswer

Setup costs

$    3,400 x

Materials handling costs

$   2,000 X

Machine operating costs

$  28,500 X

Packing costs

$    9,000 x

Problem b. Calculate the manufacturing overhead cost per metal casement manufactured during the period.

Round cost per unit to two decimal places, if needed.

Manufacturing Overhead Cost per Metal Casement

 

Setups

3,400 se

Material moves

2,000 se

Machine hours

28,500 se

Packing orders

9,000 ..,

Total manufacturing overhead

$      42,900 ..,

Casements produced

500 se

Cost per casement

$          85.8 se

Reference no: EM132459466

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