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Problem - Two-Stage Activity-Based Costing for Manufacturing
Assume Sherwin-Williams Company, a large print 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
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 Produced
50,000
30,000
Direct labor hours
400
250
Machine hours
800
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.
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