ACD Co. creates bath bomb baskets, and very popular ones at that! They have noticed that one particular area is ready for expansion when allocating costs as per the simple method. ACD Co. allocates it's OH estimate using direct labour hours, as each bath bomb basket is hand crafted. ACD Co. has contacted you to take a look, and let them know if the success of "TakeitEZ"'s line is true, or inaccurate OH allocation.

Answer the following:
1) Using simple costing, what are the costs to produce for each?
2) Using ABC, what are the costs to produce?
3) Which product do we choose to sell more of using each method? Sales price is $500 for TakeItEZ and $100 for bliss.
What can we do about the profit of each item? Should we cut, price adjust, or focus our sales on one over the other?
Do we chose Simple or ABC?

$ Direct Material (DM) per unit Direct Labour Hour (DLH) per unit Units produced Manufacturing OH total (OH) expected TakeitEZ 25.00 $ 0.50 70,000 Bliss 50.00 1.50 $25 paid per DLH 30,000 300,000 $ TakeitEZ Bliss 50 50 3.00 70,000 ? 5.00 30,000 Equals total units produced. Given in Q ? Use DLH calculated as a basis here. Activities per line: Mold threshold Artistic design hours Distribution in units Other costs $OH per line: Mold set-up costs $ Artistic design hours $ Distribution in units $ Other costs $ 100,000 50,000 50,000 100,000 300,000