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In: Accounting
Two-Stage ABC for Manufacturing Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity...
Two-Stage ABC for Manufacturing
Assume Sherwin-Williams Company, a large paint manufacturer, has
determined the following activity cost pools and cost driver levels
for the latest period:
| Activity cost pool | Activity cost | Activity cost driver |
|---|---|---|
| Machine setup | $950,000 | 2,500 setup hours |
| Material handling | 620,000 | 5,000 material moves |
| Machine operation | 200,000 | 20,000 machine hours |
The following data are for the production of single batches of two products, Mirlite and Subdue:
| Mirlite | Subdue | |
|---|---|---|
| Gallons produced | 60,000 | 10,000 |
| Direct labor hours | 500 | 350 |
| Machine hours | 900 | 250 |
| Direct labor cost | $10,000 | $7,500 |
| Direct materials cost | $350,000 | $150,000 |
| Setup hours | 15 | 11 |
| Material moves | 70 | 35 |
Determine the batch and unit costs per gallon of Mirlite and
Subdue using ABC. (Round your answers to the nearest cent.)
Mirlite $Answer
per gallon
Subdue $Answer
per gallon
Solutions
Expert Solution
Cost per unit produced
Mirlite = $ 6.39 per Gallon
Subdue = $ 16.85 per Gallon
Product Cost Mirlite Subdue
Direct materials $ 350,000 $150,000
Direct labor $10,000 $ 7,500
Manufacturing overhead
Machine setup
(15hrs x $380) $ 5,700
(11hrs x $380) $ 4,180
Material handling
(70x$124) $ 8,680
(35x$124) $ 4,340
Machine Operation
(900x$10) $ 9,000
(250x$10) $ 2,500
Total cost per batch $ 3,83,380 $ 1,68,250
Gallons produced 60000 10000
Cost per unit produced $ 6.39 $ 16.85
Machine setup = $ 950000 / 2500 = $ 380
Material handling = $620000/5000 = $ 124
Machine operation = $ 200000 / 20000 = $ 10
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ALL THE BEST !!!
ekkarill92 answered 9 months agoRelated Solutions
Two-Stage ABC for Manufacturing Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity...
Two-Stage ABC for Manufacturing
Assume Sherwin-Williams Company, a large paint manufacturer, has
determined the following activity cost pools and cost driver levels
for the latest period:
Activity Cost Pool
Activity Cost
Activity Cost Driver
Machine setup
$900,000
2,500 setup hours
Material handling
820,000
4,000 material moves
Machine operation
400,000
20,000 machine hours
The following data are for the production of single batches of
two products, Mirlite and Subdue:
Mirlite
Subdue
Gallons produced
60,000
25,000
Direct labor hours
400
250
Machine...
Two-Stage ABC for Manufacturing Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity...
Two-Stage ABC for Manufacturing
Assume Sherwin-Williams Company, a large paint manufacturer, has
determined the following activity cost pools and cost driver levels
for the latest period:
Activity Cost Pool
Activity Cost
Activity Cost Driver
Machine setup
$990,000
2,500 setup hours
Material handling
860,000
5,000 material moves
Machine operation
200,000
20,000 machine hours
The following data are for the production of single batches of
two products, Mirlite and Subdue:
Mirlite
Subdue
Gallons produced
50,000
30,000
Direct labor hours
400
250...
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Montreat Manufacturing has developed the following activity cost
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Activity Cost Driver at Practical Capacity
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$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*...
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Vollrath Manufacturing, a division of The Vollrath Company,
manufactures restaurant equipment. Assume the company has
determined the following activity cost pools and cost driver levels
for the year:
Activity Cost Pool
Activity Cost
Activity Cost Driver
Machine setup
$ 750,000
18,750
setup hours
Material handling
121,600
3,800
tons of materials
Machine operation
552,500
16,250
machine hours
The following data are for the production of single batches of two
products, Equipment Stands and Charbroilers during the month...
Assume a company that uses activity-based costing (ABC) has only two products – A and B....
Assume a company that uses activity-based costing (ABC) has only
two products – A and B. The company does not have any
organization-sustaining activities or unused capacity costs. The
company’s total manufacturing overhead cost of $56,000 has been
allocated to the three activities shown below:
Setups
Machining
Packing Orders
Activity measure quantity: Product A
20
1,000
150
Activity measure quantity: Product B
20
?
350
Overhead cost per activity cost pool
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$
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Activity rate
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Traditional Product Costing versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing...
Traditional Product Costing versus Activity-Based
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Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $636,400
consisting of the following activity cost pools for the current
month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$ 132,000
Setup hours
2,000
Materials handing
64,800
Number of moves
600
Assembly
360,000
Assembly hours
18,000
Maintenance
79,600
Maintenance hours
1,990
Total
$636,400
Total direct labor hours used during the month were...
Traditional Product Costing Versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing...
Traditional Product Costing Versus Activity-Based Costing
Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $252,000,
consisting of the following activity cost pools for the current
month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$69,000
Setup hours
1,500
Materials handling
39,000
Number of moves
300
Assembly
120,000
Assembly hours
12,000
Maintenance
24,000
Maintenance hours
1,200
Total
$252,000
Total direct labor hours used during the month were 8,000....
Traditional Product Costing Versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing...
Traditional Product Costing Versus Activity-Based
Costing
Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $216,000,
consisting of the following activity cost pools for the current
month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$51,000
Setup hours
1,500
Materials handling
21,000
Number of moves
300
Assembly
120,000
Assembly hours
12,000
Maintenance
24,000
Maintenance hours
1,200
Total
$216,000
Total direct labor hours used during the month were 8,000....
Traditional Product Costing Versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing...
Traditional Product Costing Versus Activity-Based
Costing
Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $216,000,
consisting of the following activity cost pools for the current
month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$51,000
Setup hours
1,500
Materials handling
21,000
Number of moves
300
Assembly
120,000
Assembly hours
12,000
Maintenance
24,000
Maintenance hours
1,200
Total
$216,000
Total direct labor hours used during the month were 8,000....
Traditional Product Costing versus Activity-Based Costing Assume that Panasonic Company has determined its estimated total manufacturing...
Traditional Product Costing versus Activity-Based
Costing
Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $436,000
consisting of the following activity cost pools for the current
month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$ 124,000
Setup hours
4,000
Materials handling
57,000
Number of moves
600
Assembly
225,000
Assembly hours
12,500
Maintenance
30,000
Maintenance hours
1,200
Total
$436,000
Total direct labor hours used during the month were...
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