Macon Industries has the following budget information available for February: Re

Question

Macon Industries has the following budget information available for February:

Required: Use activity based costing to prepare a manufacturing cost budget for February. Clearly distinguish between unit, batch, and facility-level costs.

Units manufactured 20,000 Factory administration $45,000 Assembly 1/2 hour per unit x $8 Direct materials 2 pounds per unit x $3 Inspection $200 per batch of 1,000 units Manufacturing overhead $3 per unit Product development $15,000 Setup cost $10 per batch of 1,000 units

Explanation / Answer

Manufacturing Cost Budget for February Unit Costs' Breakup Costing $ Assembly 1/2 hour per unit x $8 80000 Direct materials 2 pounds per unit x $3 120000 Manufacturing overhead $3 per unit 60000 260000 (A) Batch Costs Breakup Costing $ Inspection $200 per batch of 1,000 units 4000 Setup cost $10 per batch of 1,000 units 200 4200 (B) Facility Level Costs $ Factory administration 45000 Product development 15000 60000 (C) Total Manufacturing Costs - (A) + (B) + (C) 324200

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