Two-Stage ABC for Manufacturing Detroit Foundry, a large manufacturer of heavy e
ID: 2730080 • Letter: T
Question
Two-Stage ABC for Manufacturing Detroit Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year: Activity Cost Pool Activity Cost Activity Cost Driver Machine setup $ 660,000 12,000 setup hours Material handling 100,000 2,000 tons of materials Machine operation 450,000 10,000 machine hours The following data are for the production of single batches of two products, C23 Cams and U2 Shafts: C23 Cams U2 Shafts Units produced 500 300 Machine hours 4 5 Direct labor hours 200 400 Direct labor cost $ 5,000 $ 10,000 Direct materials cost $ 30,000 $ 20,000 Tons of materials 12.5 8 Setup hours 3 7 Determine the unit costs of C23 Cams and U2 Shafts using ABC. (Round answers to the nearest cent.) C23 Cams $Answer 0 Incorrect U2 Shafts $Answer 0 IncorrectExplanation / Answer
Machine Setup = $ 660000 / 12000 hrs = $ 55 / hour
Machine Handling = $ 100000 / 2000 tons = $ 50/ton
Machine Operatiion =$ 450000 / 10000 machine hours = $ 45/ machine hour
PRODUCT COST C23 CAMS U2 SHAFTS Direct Materials $ 30000 $ 20000 Direct Labour $ 5000 $ 10000 Manufacturing Overhead: Machine Setup ( setup hours * machine setup per hour ) $ 165 $ 385 Machine Handling ( Tons of Material * Per Ton) $ 625 $ 400 Machine Operation ( Machine hour * rate per machine hour) $ 180 $ 225 Total Cost $ 35970 $ 31010 Units Produced 500 300 Cost per unit 71.94 103.37Related Questions
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