FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 Driver
12,000 setup hours
2,000 tons of materials
10,000 machine hours
Activity Cost Pool Activity Cost
Machine setup
$ 660,000
Material handling
100,000
Machine operation 450,000
The following data are for the production of single batches of two products, C23 Cams and U2 Shafts:
C23 Cams U2 Shafts
500
300
4
200
5
400
$10,000
$5,000
$30,000
$ 20,000
Units produced
Machine hours
Direct labor hours
Direct labor cost
Direct materials cost
Tons of materials
Setup hours
12.5
3
U2 Shafts
8
7
Determine the unit costs of C23 Cams and U2 Shafts using ABC. (Round answers to the nearest cent.)
C23 Cams
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Transcribed Image Text: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 Driver 12,000 setup hours 2,000 tons of materials 10,000 machine hours Activity Cost Pool Activity Cost Machine setup $ 660,000 Material handling 100,000 Machine operation 450,000 The following data are for the production of single batches of two products, C23 Cams and U2 Shafts: C23 Cams U2 Shafts 500 300 4 200 5 400 $10,000 $5,000 $30,000 $ 20,000 Units produced Machine hours Direct labor hours Direct labor cost Direct materials cost Tons of materials Setup hours 12.5 3 U2 Shafts 8 7 Determine the unit costs of C23 Cams and U2 Shafts using ABC. (Round answers to the nearest cent.) C23 Cams
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