E6 -19

Two Stage ABC for Manufacturing

Merlot Company has determined its activity cost pools and cost drivers to the following:

Cost Pools

Setup $56,000

Material handling 12,800

Machine operation 240,000

Packing 60,000

Total indirect manufacturing costs $368,800

Cost drivers

Setups 350

Material moves 640

Machine hours 20,000

Packing orders 1,200

One product made by Merlot, metal casements, used the following activities during the period to produce 500 units:

Setups 20

Materiel moves 640

Machine hours 1,900

Packing orders 150

A. Calculate the cost per unit of activity for each activity cost pool for Merlot Company.

B. Calculate the manufacturing overhead cost per metal casement manufactured during the period.