Two-Stage ABC for Manufacturing
Columbus 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: C23 Cams U2 Shafts Units produced 500 400 Machine hours 2 5 Direct labor hours 300 500 Direct labor cost $5,000 $10,000 Direct materials cost $30,000 $20,000 Tons of materials 12.5 8 Setup hours 5 7
Determine the unit costs of C23 Cams and U2 Shafts using ABC.
C23 Cams $Answer
U2 Shafts $Answer