Two-Stage ABC for ManufacturingMerlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup $59,500 Material handling 16,000 Machine operation 300,000 Packing 60,000 Total indirect manufacturing costs $435,500 Cost drivers Setups 350 Material moves 640 Machine hours 20,000 Packing orders 1,000 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 a. Calculate the cost per unit of activity for each activity cost pool for Merlot Company. Setup costs Materials handling costs Machine operating costs Packing costs 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 Material moves Machine hours Packing orders Total manufacturing overhead Casements produced Cost per casement
Two-Stage ABC for ManufacturingMerlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup $59,500 Material handling 16,000 Machine operation 300,000 Packing 60,000 Total indirect manufacturing costs $435,500 Cost drivers Setups 350 Material moves 640 Machine hours 20,000 Packing orders 1,000 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 a. Calculate the cost per unit of activity for each activity cost pool for Merlot Company. Setup costs Materials handling costs Machine operating costs Packing costs 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 Material moves Machine hours Packing orders Total manufacturing overhead Casements produced Cost per casement
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | $59,500 |
| Material handling | 16,000 |
| Machine operation | 300,000 |
| Packing | 60,000 |
| Total indirect |
$435,500 |
| Cost drivers | |
|---|---|
| Setups | 350 |
| Material moves | 640 |
| Machine hours | 20,000 |
| Packing orders | 1,000 |
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 |
a. Calculate the cost per unit of activity for each activity cost pool for Merlot Company.
| Setup costs |
|
| Materials handling costs |
|
| Machine operating costs |
|
| Packing costs |
|
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 |
|
| Material moves |
|
| Machine hours |
|
| Packing orders |
|
| Total manufacturing overhead |
|
| Casements produced |
|
| Cost per casement |
|
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