Question

ctivity-Based Budget
Macon Industries has the following budget information available for February:

Units manufactured	30,000
Factory administration	$60,000
Assembly	0.5	hour per unit X $12
Direct materials	2	pounds per unit X $7
Inspection	$600	per batch of 1,000 units
Manufacturing overhead	$7	per unit
Product development	$20,000
Setup cost	$14	per batch of 1,000 units

Use activity based costing to prepare a manufacturing cost budget for February. Clearly distinguish between unit, batch, and facility-level costs.

Macon Industries Activity-Based Manufacturing Cost Budget For the Month of February
Unit-level costs:
Direct materials	Answer
Assembly	Answer
AnswerFactory administrationInspectionManufacturing overheadProduct development	Answer	Answer
Batch-level costs:
Setup	Answer
AnswerFactory administrationInspectionManufacturing overheadProduct development	Answer	Answer
Product-level costs:
AnswerFactory administrationInspectionManufacturing overheadProduct development		Answer
Facility-level costs:
AnswerFactory administrationInspectionManufacturing overheadProduct development		Answer
Budgeted manufacturing costs		Answer

Answer 1

Activity-Based Manufacturing Cost Budget
For the Month of February
Unit-level costs:
Direct materials(=30000*2*7)	420,000
Assembly (=30000*0.5*12)	180,000
Manufacturing overhead (=30000*7)	210,000	810,000
Batch-level costs:
Setup (=30000*14/1000)	420
Inspection (=30000*600/1000)	18,000	18,420
Product-level costs:
Product development		20,000
Facility-level costs:
Factory administration		60,000
Budgeted manufacturing costs		908,420