Question

Two Stage ABC for Manufacturing

Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity costs 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 820,000 5,000 materials 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 purchased 50,000 30,000
Direct labor hours 400 250
Machine hours 800 250
Direct labor cost $10,000 $7,500
Direct materials cost $350,000 $150,000
Setup hours 15 12
Material moves 60 35
Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC.

Answer 1

The answer and procedures of the exercise are attached in a microsoft excel document.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.