Two-Stage ABC for Manufacturing Assume Sherwin-Williams Company, a large paint 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 620,000 5,000 material 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 60,000 10,000 Gallons produced Direct labor hours Machine hours Direct labor cost $10,000 $7,500 Direct materials cost $350,000 $150,000 Setup hours Material moves 500 900 Subdue $ 15 70 350 250 Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC. (Round your answers to the nearest cent.) Mirlite $ per gallon per gallon 11 35
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Two-Stage ABC for Manufacturing
Assume Sherwin-Williams Company, a large paint 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
620,000 5,000 material 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
60,000 10,000
Gallons produced
Direct labor hours
Machine hours
Direct labor cost
Direct materials cost
Setup hours
Material moves
500
900
350
250
$10,000 $7,500
$350,000 $150,000
Subdue $
15
70
Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC. (Round your answers to the nearest cent.)
Mirlite $
per gallon
11
35
per gallon](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F475b0c8f-9dd7-487b-9264-3e04ebb75dff%2F4d3f54ce-357a-4d11-8dc4-c72824835715%2F2jv2hwg_processed.png&w=3840&q=75)
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