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
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 520,000 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 30,000 20,000
Direct labor hours 500 250
Machine hours 800 350
Direct labor cost $10,000 $7,500
Direct materials cost $350,000 $150,000
Setup hours 15 12
Material moves 40 35
Determine unit costs per gallon of Mirlite and Subdue using ABC.
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