Analyze the product profitability under conventional & Activity Based Costing system.

1. Using the facts and figures provided in the case Brilliant Accents you are required to analyze product profitability for the three products under two cost systems and make necessary recommendation to management Brilliant Accents Company manufactures and sells three styles of kitchen faucets Brass, Chrome, and White Production takes 25, 25, and 10 machine hours to manufacture 1000-unit batches of brass, chrome and white faucets, respectively. The following additional data apply: BRASS CHROME WHITE Projected sales in units #30,000 #50,000 #40,000 PER UNIT data: Selling price $45 S25 $30 Direct materials $8 $4 $8 Components per Unit 20 5 Direct labor $15 $3 $9 Hours per 1000-unit batch: Machine hours 25 25 10 Setup hours 1.0 0.5 1.0 Inspection hours 30 20 20 8 Total overhead costs and activity levels for the year are estimated as follows: Activity Overhead costs Purchasing $120,000 Material Handling $240,000 Setups $465,500 Inspections $405,000 Machine Maintenance and Depreciation $144,000 The purchase manager places 3, 1 and 2 purchase orders respectively for each batch of production of Brass Chrome and White faucets. As a matter of policy, an average batch size is of 1000 units irrespective of the products produced in each batch. 460 : 22