Two-Stage ABC for Manufacturing with ABC Variances Meade Manufacturing developed the following activity cost pool information for its current year manufacturing activities: Setup Machine operations First unit inspection Packaging Purchasing and materials handling $665,000 950,000 kilograms 315,000 1,500 setups 2,156,000 14,000 machine hours 392,000 1,600 batches 140,000 200,000 units Units Batches Setups* Machine hours Kilograms of raw materials Direct materials costs Budgeted Activity Cost Actual production information for three of Meade's products during the year is as follows: Required Activity Cost Driver at Practical Capacity Standard Standard Specialty Product A Product B Products 35,000 15,000 10,000 400 800 800 140 150 Unit cost $ 1,200 175,000 $81,200 95,000 $37,800 Direct labor costs $133,700 $90,860 $63,000 *Some products require setups on two or more machines. 50 45 650 65,000 $62,090 a. Determine the unit cost of each product for Meade Manufacturing under activity-based costing. Product A Product B Specialty Product 0 $ 0 $ 0 b. The unit cost of the specialty products is much higher than the unit cost of Standard Product A or Standard Product B due to: number of machine hours per unit for specialty products number of setups per batch for specialty products Please answer all parts of the question.
Two-Stage ABC for Manufacturing with ABC Variances Meade Manufacturing developed the following activity cost pool information for its current year manufacturing activities: Setup Machine operations First unit inspection Packaging Purchasing and materials handling $665,000 950,000 kilograms 315,000 1,500 setups 2,156,000 14,000 machine hours 392,000 1,600 batches 140,000 200,000 units Units Batches Setups* Machine hours Kilograms of raw materials Direct materials costs Budgeted Activity Cost Actual production information for three of Meade's products during the year is as follows: Required Activity Cost Driver at Practical Capacity Standard Standard Specialty Product A Product B Products 35,000 15,000 10,000 400 800 800 140 150 Unit cost $ 1,200 175,000 $81,200 95,000 $37,800 Direct labor costs $133,700 $90,860 $63,000 *Some products require setups on two or more machines. 50 45 650 65,000 $62,090 a. Determine the unit cost of each product for Meade Manufacturing under activity-based costing. Product A Product B Specialty Product 0 $ 0 $ 0 b. The unit cost of the specialty products is much higher than the unit cost of Standard Product A or Standard Product B due to: number of machine hours per unit for specialty products number of setups per batch for specialty products Please answer all parts of the question.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Two-Stage ABC for Manufacturing with ABC Variances
Meade Manufacturing developed the following activity cost pool information for its current year manufacturing activities:
Budgeted
Activity
Cost
Purchasing and materials handling $665,000 950,000 kilograms
315,000
1.500 setups
14,000 machine hours
2,156,000
392,000
1,600 batches
140,000
Setup
Machine operations
First unit inspection
Packaging
Actual production information for three of Meade's products during the year is as follows:
Required
Standard Standard Specialty
Product A Product B Products
Units
35,000 15,000 10,000
Batches
140
50
400
Setups*
150
45
800
1,200
650
800
Machine hours
Kilograms of raw materials
175,000
65,000
95,000
Direct materials costs
$81,200 $62,090 $37,800
Direct labor costs
$133,700 $90,860 $63,000
*Some products require setups on two or more machines.
Activity Cost
Driver at Practical
Capacity
Product A
0 $
200,000 units
a. Determine the unit cost of each product for Meade Manufacturing under activity-based costing.
Unit cost $
Product B Specialty Product
0 $
0
Please answer all parts of the question.
b. The unit cost of the specialty products is much higher than the unit cost of Standard Product A or Standard Product B due to:
* number of machine hours per unit for specialty products
number of setups per batch for specialty products
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