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 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 hours 800 250 Direct labor cost $10,000 $7,500 Direct materials cost $360,000 $150,000 Setup hours 15 12 Material moves 60 35 $ 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

The answer is shown in the images attached with all the working notes. Kindly refer them.
Product Costs Particulars Direct Material cost Direct Labor cost Mirlite 3,60,000 Topoo Subdue 10,000 750o Manufacturing Overhead: * * Machine Setup Maten'cal Handling * Machine Operation Total cost per batch CA) Gallons produced (B) cost per gallon =) A 5400 12300 16,000 403700 60,000 6.73 4320 7175 soon 173995 25000 6.96 B

* WORKING NOT EJ-1 Calculation af of Manufacturing Crecheado D Machinesetups Machine setup cost per setup hours X Setup hours Ccalculated in working note 2) Mirlite = 15x 360 =5400 Subdue = 12X 360 4320 (calculated in W:N,2) 2) Malenial Handling to Material Handling cost per Material mores x Material Moves Mirlite ) GOX 205 = 12500 Subdue =358205 = 775 Ccalculated in W.n.2) 3) Machine Operation >> Machine operation cost per Machine Hours x Machine Hours Mirlite = 26 x 800 - 16.000 - subdue = 20x210 5000

*. WORKING NOTE-2 Machine setup _ Total machine setup cost Total set up hours 79,00000_5 360 per setup * Material Handling Inter Milenial handeling cost Total Material Moves 8,20,000 2500 4000 5 205 per Malena Moves Machine Operation Total Machine Operation cost Total Machine Hours = 400,000 5) 20 per Machine 20,000 Hours Machine Setup Material Handling Machine Operation 360 205 20