Question - 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:
| 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:
| 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.