Two-Stage ABC for Manufacturing (LO2)

Assume Sherwin-Williams Company, a large paint 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 Gallonsproducodh anun tunes: 50,000 30,000 DifecwiabOmmoursaeanec e©ss a e 400 250 WikekelaliateMntowliGys, 5 neo oo ene 800 250 DIFSCwADOmCOSta wa scn si aaei

a. $10,000 $7,500 Direct materials cost.......... $350,000 $150,000 SOUUPMNOUNS Baran cui assets Sacto & US) 12 MateraliMOVeS® 1a. 0000065 « 60 35:

Required Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC.