# Activity-Based Costing for Merlot Company## a. Calculating the Cost per Unit of ActivityTo determine the cost per unit of activity for each activity cost pool for Merlot Company, consider the following activity categories:1. **Setup Costs:** $_____2. **Materials Handling Costs:** $_____3. **Machine Operating Costs:** $_____4. **Packing Costs:** $_____Each cost represents a critical component of the overall production process.## b. Manufacturing Overhead Cost Calculation per Metal CasementTo calculate the manufacturing overhead cost per metal casement produced during the period:### Steps for Calculation1. **Identify Individual Overheads:** - **Setups** - **Material Moves** - **Machine Hours** - **Packing Orders**2. **Determine the Total Manufacturing Overhead:** - Sum all individual overhead costs.3. **Calculate Overhead Cost per Metal Casement:** - Divide the total manufacturing overhead by the number of casements produced to determine the cost per unit.### Worksheet| Manufacturing Overhead Cost per Metal Casement | ||------------------------------------------------|-------------------|| Setups | $ || Material Moves | $ || Machine Hours | $ || Packing Orders | $ || **Total Manufacturing Overhead** | $ || Casements Produced | || **Cost per Casement** | $ |### Notes- **Round Off Values:** Ensure to round the cost per unit to two decimal places if needed for precision.- **Objective:** This method provides a detailed breakdown to streamline budgeting and cost forecasting for better financial management.These steps are crucial for businesses like Merlot Company to allocate costs accurately and optimize production efficiency. **Two-Stage ABC for Manufacturing**Merlot Company has determined its activity cost pools and cost drivers as follows:### Cost Pools| **Activity** | **Cost** ||----------------------------|-----------|| Setup | $84,000 || Material handling | $19,200 || Machine operation | $360,000 || Packing | $60,000 || **Total indirect manufacturing costs** | **$523,200** |### Cost Drivers| **Activity** | **Cost Driver Units** ||----------------------|------------------------|| Setups | 350 || Material moves | 640 || Machine hours | 20,000 || Packing orders | 1,200 |### Activity Usage for Metal CasementsOne product made by Merlot, metal casements, used the following activities during the period to produce 500 units:| **Activity** | **Number Used** ||--------------------|------------------|| Setups | 20 || Material moves | 80 || Machine hours | 1,900 || Packing orders | 150 |

Name: # Activity-Based Costing for Merlot Company## a. Calculating the Cost
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Description: # Activity-Based Costing for Merlot Company## a. Calculating the Cost per Unit of ActivityTo determine the cost per unit of activity for each activity cost pool for Merlot Company, consider the following activity categories:1. **Setup Costs:** $____

a) Cost per unit of activity for each activity cost pool for Merloc company: Particulars Amount $…

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Two-Stage ABC for Manufacturing Merlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup $84,000 Material handling 19,200 Machine operation 360,000 Packing 60,000 Total indirect manufacturing costs $523,200 Cost drivers Setups Material moves 350 640 Machine hours 20,000 Packing orders 1,200 One product made by Merlot, metal casements, used the following activities during the period to produce 500 units: Setups 20 Material moves 80 Machine hours 1,900 Packing orders 150

Two-Stage ABC for Manufacturing Merlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup $84,000 Material handling 19,200 Machine operation 360,000 Packing 60,000 Total indirect manufacturing costs $523,200 Cost drivers Setups Material moves 350 640 Machine hours 20,000 Packing orders 1,200 One product made by Merlot, metal casements, used the following activities during the period to produce 500 units: Setups 20 Material moves 80 Machine hours 1,900 Packing orders 150

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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