Question

Two-Stage ABC for Manufacturing Meridian Company has determined its activity cost pools and cost drivers to be the following: Cost pools Setup $63.000 Material handling 25,600 Machine operation 220,000 Packing 90.000 Total indirect manufacturing costs $398,600 Cost drivers Setups 350 Material moves 640 Machine hours 20,000 Packing orders 1.200 One product made by Meridian, metal casements, used the following activities during the period to produce 500 units: Setups 20 Material moves Machine hours 1,900 Packing orders 150 (a) Calculate the cost per unit of activity for each activity cost pool. Setup Material handling S Material operation 5 Packing (b) Calculate the manufacturing overhead cost per metal casement manufactured during the period. Round your answer to the nearest cent. $0

Answer 1

Requirement A Set ups Material Moves Machine hours Packing orders Cost driver Overhead Set ups $ 63,000.00 Material moves $ 25,600.00 Machine hours $ 220,000.00 packing orders $ 90,000.00 Cost Pool Cost per unit of activity 350 $ 180.00 Per set up 640 $ 40.00 Per Material move 20000 $ 11.00 Per Machine hour 1200 $ 75.00 Per order Requirement B Manfacturing overhead cost per metal casement = 38950 / 500 units $ 77.90 Explaination : Set ups Material Moves Machine hours Packing orders Cost Driver rate Unit Cost 20 $ 180.00 $ 3,600.00 80 $ 40.00 $ 3,200.00 1900 $ 11.00 $ 20,900.00 150 $ 75.00 $ 11,250.00 $ 38,950.00