Two-Stage ABC for Manufacturing (LO2)

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........ $600,000 12,000 setup hours Material handling ...... 120,000 2,000 tons of materials Machine operation..... 500,000 10,000 machine hours The following data are for the production of single batches of two products, C23 Cams and U2 Shafts during the month of August:

- C23 Cams U2 Shafts WhtSiOKOGUCCOR t-tee ewee oe 500 300 MEGIINGINOWIS. . sa sooomenguds 4 5 DirectlabonMOurSmerinec.- «:= 200 400 DirecHiaboncoste. 2c en ..s 0 $5,000 $10,000 Direct materials cost.......... $30,000 $20,000 OMS: OlaimatenialSeacsenseiene terete 12:5 8 Sewo@lice done sown sees e 3 if Required Determine the unit costs of C23 Cams and U2 Shafts using ABC.