Two-Stage ABC for Manufacturing

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

Cost pools

Setup

$35,000

Material handling

12,800

Machine operation

280,000

Packing

30,000

Total indirect manufacturing costs

$357,800

Cost drivers

Setups

350

Material moves

640

Machine hours

20,000

Packing orders

1,200

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

Setups

20

Material moves

80

Machine hours

1,900

Packing orders

150

(a) Calculate the cost per unit of activity for each activity cost pool.

Setup

Answer

Material handling

Answer

Material operation

Answer

Packing

Answer