Problem - Two-Stage Activity-Based Costing for Manufacturing
Assume Sherwin-Williams Company, a large print manufacturer, has determined the following activity cost pools and cost driver levels for the latest period:
|
Activity Cost Pool
|
Activity Cost
|
Activity Cost Driver
|
|
Machine Setup
|
$950,000
|
2,500 setup hours
|
|
Material Handling
|
820,000
|
5,000 materials moves
|
|
Machine Operation
|
200,000
|
20,000 machine hours
|
The following data are for the production of single batches of two products, Mirlite and Subdue:
|
Mirlite
|
Subdue
|
|
Gallons Produced
|
50,000
|
30,000
|
|
Direct labor hours
|
400
|
250
|
|
Machine hours
|
800
|
250
|
|
Direct labor cost
|
$10,000
|
$7,500
|
|
Direct Materials cost
|
$350,000
|
$150,000
|
|
Setup hours
|
15
|
12
|
|
Material moves
|
60
|
35
|
Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC.