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Two-Stage ABC for Manufacturing
Merlot Company has determined its activity cost pools and cost drivers to be the following:
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
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