Question

Two-Stage ABC for Manufacturing with Variances
Montreat Manufacturing has developed the following activity cost pool information for its 2016 manufacturing activities:

	Budgeted Activity Cost	Activity Cost Driver at Practical Capacity
Purchasing and materials handling	$2,700,000	900,000 kilograms
Setup	2,800,000	1,120 setups
Machine operations	3,816,000	12,000 hours
First unit inspection	200,000	1,000 batches
Packaging	1,000,000	312,500 units

Actual 2016 production information is as follows:

	Standard Product A	Standard Product B	Specialty Products
Units	150,000	100,000	50,000
Batches	100	80	600
Setups*	300	160	900
Machine operations (hours)	6,000	3,000	2,000
Kilograms of raw materials	400,000	300,000	200,000
Direct materials costs	$900,000	$600,000	$820,000

*Some products require setups on two or more machines.

a. Determine the unit cost of each product for Montreat Manufacturing.
Round rates to two decimal places.
Activity-based overhead rates:

Purchasing & materials handling	$Answer
Setup	$Answer
Machine operations	$Answer
First unit inspection	$Answer
Packaging	$Answer

Use rounded overhead rates calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
Round cost per unit to two decimal places.

	Standard Product A	Standard Product B	Specialty Products
Direct material	$Answer	$Answer	$Answer
Overhead cost
Purchasing & handling	Answer	Answer	Answer
Setup	Answer	Answer	Answer
Machine operations	Answer	Answer	Answer
First unit inspection	Answer	Answer	Answer
Packaging	Answer	Answer	Answer
Total costs	$Answer	$Answer	$Answer
Units	Answer	Answer	Answer
Cost per unit	$Answer	$Answer	$Answer

Answer 1

ANSWER a

Activity-based overhead rates

b

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