Question

CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 1 Not yet answered Marked out of 16.00 Flag question 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 Machine setup Material handling Machine operation Activity Cost $990,000 860,000 200,000 Activity Cost Driver 2,500 setup hours 5,000 material moves 20,000 machine hours The following data are for the production of single batches of two products, Mirlite and Subdue Mirlite Subdue 50,000 30,000 250 250 $10,500 $8,000 Direct materials cost $390,000 $190,000 12 35 Gallons produced Direct labor hours Machine hours Direct labor cost 400 800 Setup hours 15 Material moves 60 Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC. Round cost per gallon to two decimal places Product Costs Mirlite Subdue Direct materials Direct labor Manufacturing overhead: Machine setups Material handling Machine operation Total cost per batch Gallons produced Cost per gallon

Answer 1

Product Costs
	Mirlite	Subdue
Direct materials	390000	190000
Direct labor	10500	8000
Manufacturing overhead:
Machine setups	5940	4752
Material handling	10320	6020
Machine operation	8000	2500
Total cost per batch $	424760	211272
Gallons produced	50000	30000
Cost per gallon $	8.50	7.04

Working:

Activity cost pool	Activity cost $	Activity cost driver		Activity rate $	Mirlite		Subdue
					Cost driver usage	Cost $	Cost driver usage	Cost $
Machine setup	990000	2500	setup hours	396	15	5940	12	4752
Material handing	860000	5000	material moves	172	60	10320	35	6020
Machine operation	200000	20000	machine hours	10	800	8000	250	2500