C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. C The Crystal Coast O... Apps Crystal Coast Ocea... Implementation of Activity Based Costing for Sunny View Dairy Farm 2/6 CSAC 2510 Fall 2019 Maple Hill Dairy Farm Maple Hill Duiry Farm is a small, family-ouned business that started its operations in 1996 with the goal of using all- manural peocesses to ereate high quality dairy producs The company prodaces several different products sold in health food markes and some of the larger supermarkets in the arca as well s in the Maple Hill Country Store, a small retail store located nes to the farm Maple Hills prodacts are well-known for their quality nd have gained a strong brand oyalty theoughout the regicn in which Maple Hill operales A key competitive actor for Maple Hill is that is uses only glss boles in the packaging of its products, which appeals to many of its targeted customers Maple Hill's sales have grown rapidly in recent years, but prodacticn is curendly limited by the number and size of the facilities cn sile that can only accommodate 300 animals (of which 130 cows are part of the milking hend) As a result Maple Hill is considering expanding its operations to allow it to meet the increasing demand for its prodacts In oeder expand, Maple Hill would have to buy additional lnd, build more bans ind enlarge the milking facility. Maple Hill's mnager, Laur Asaley, is concerned about the potentially large financial outlays that Maple Hill would incur with expansion and she feels that she should examine whether or not current operations are efficient and cost effective before expanding Laura is aso considering the possibility ef packaging the farm's product in plastic d paper containers instead of glas bottles. She expects that this would attract new customers, nd in addition, i would reduce costs significantly. The direct cost of packaging the prodact (now S.75 per bottle) would be about cne-third the curent cost, ind the cost of the bottling equipment foe filling the plastic or paper containers would fall to one-half the cost of he cument equipment within 6-month time All oher costs would remain the same. Also, Laura thinks the sales of the famm's prodacts would grow even faster with the beoadened product line -the beand reputation of the frm's preducts could be leveraged to bring in new cusiomers, nd the use of plastic or paper containers would enable the farm to atract new supermarkets and other retailers thut do not preseatly handle boles Laura thinks that the supemarket customers would be willing to pay at least S.40 per quart more foe Maple Hill products relative to other store brands. Laura subscribes to the relevant trade journals in dairy farming and has excerpted the following infoemation from a recent issue of one of her journals shous the buying eriteria of a sample of supermaket customers who were purchasing milk in plastic and paper containers (1most important, and 5= least important). The curest supermarket prices for these products in Maple Hill's area are S1.25 per quart for ech product escept eggmog which sells foe $1.80. Supermarkets mark up the peice of milk by about 40% from dairy cost, so the peice received by the dairy is somewhat less Attribute Importance Ranking, by Product Whole Low-Fat Skim Chocolate Buying Criteria Milk Milk Milk Eggneg Freshness 3 3 2 4 4 Packaging 4 4 3 2 3 Tale 2 1 Color and Texture 4 3 2 1 2 Price 1 + Background about Maple Hill's Operations The main processes involvad in milk peoduction are as follows I.Milking An employee begins by sanitizing the cows. Once this is done, the employee amaches the cows to electnic milking machine. The machine automatically provides information on the number of gallons prodaced by each cow and pumps the mik into a holding tank before the next peocess begins. This is a very time Maple Hill Dairy Fa....pdf a Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf How Policygenius .. SNew Tab C The Crystal Coast O.. Crystal Coast Ocea... Apps Implementation of Activity Based Costing for Sunny View Dairy Farm 4/6 Fall 2019 except for bottling equipment The accounts, sub-accounts and costs for the most recent operating year are shown in Table These costs are often called resouree costs, nd are labeled as such in the OROS sotware system Maple Hill grows on site most of the feed needed at the dairy farm. The cost of peoducing he feed and some additional feed purchased during the year is included under labor and materials for other processing costs. Table I: Overhead (Resource) Costs for Maple Hill Dairy Farm ACCOUNTS Bottling Equipment Oer Facilities Costs SUB ACCOUNTS ACTUAL COSTS S1528,6204 Uileies Depreciation Property Tax 72,395 22,976 10.014 Total Oher Facilities Cost s105385 Labor and malerials 428,800 4.278 Oher Processing Costs Supplies Equipment repairs and maintonance 21,565 13.688 Depreciation Total Oher Processing Cost Kieneral and Administrative Administration 468,33 105,522 23.471 Interest Expenue Total General nd Administrative Toal 128.993 2231,329 In addition to the overhead costs, Maple Hill hs direct costs for bottles and other materials. These materials are purchased from a variety of suppliers Each glass bottle costs Maple Hill S.75, including both purchase nd recyeling cost Oher ingredients inclade cocoa, sugar, and spices Cocoa, used in the prodaction of chocolate milk, casts S.05 per bottle. Sugar, used in both chocolate milk and eggnog, costs S.05 per bottle. Spices, used to make eggaog, cost S.08 per bottle. total, 65,700 ounces of sugar nd cocoa were used in the production of chocolate milk, and 76,650 ounces of sugar and spice were used in the producticn of eggnog Laura has heard from a local vendoe that information from an sctivity-bsed costing would be helpful to Laur nimproving Maple Hill's operations With some guidance from a cost consulant recommended by the vendor, the following peodaction activities were identified Milking Separting, pasteurizing, nd homogenizing Mixing Bottling Warehousing General and Administrative (G&A) Receiving nd Inspecting Cleaning and Repairs + Overhed (Resource-consumption Cost Drivers Laura has further analyzed the cost structure, to desemmine how the overhead (resource) costs could be allocaned to the eight activities idenified above. On the advice of the cost consultant, e detemined that all costs in the general and Maple Hill Dairy Fa....pdf ^ Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O C UAssign Introdu x c Get Ho x X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. Apps Crystal Coast Ocea... The Crystal Coast O... Implementation of Activity Based Costing for Sunny View Dairy Farm 5/6 CSAC 2510 Fall 2019 administrative account could be allocated to the general and administrative activity. Morcover, most (90%) of the costs the boling machine account could be allocated to the bottling activity, and the remainder to the receiving and inspecting activity. Deemining how the other processing costs could be related to the activities is not as simple, but after some careful study the following etimes were made for the other processing costs account % Usage of Ocher Aetivities Using Ocher Processing Costs Processing Casts Milking 30% Seperating Pasteurizing Homogeaizing 15% Mixing Bottling 15% a5% Wrehousing 10% G&A 0% Recciving and Inpecting Ineredients 0% Cleaning and Repairs Toal 00% The other facilities cost account includes the costs of maintaining the warehouse and milking barn, and is allocated to he activities on the basis of square feet. facilities cost account, which is one of Maple Hill's overhead (resource) accounts. Square feet is erefore the resource-consumpticn cost driver for the other Activities Square Ft Milking Separating Pasteurizing Homogenizing i0.000k 2000 Mixing 1,000 Bottling 1,500 warchousing 12.500 G&A t000 Cleaning and Repairs 1,000 30.000 Toal + Activity-consumption Cost Drivers After some additicnal study, it was decided that the best way to allocate the costs of each activity to the products was to use the follouing activity-consumption drivers Maple Hill Dairy Fa....pdf ^ Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. C The Crystal Coast O... Apps Crystal Coast Ocea... Implementation of Activity Based Costing for Sunny View Dairy Farm 6/6 CSAC 2510 Fall 201 Activities Activity-consumption Cost Driver Number of botles produced Machine Hours Separating Machine Hours, Mising Milking Separaing Pastcurizing Homoacaizing Mising Boltling Machine Hours, Boling Labor Hours, Warehousing Warehousing G&A INumber of Invoices Ounces Labor Hours, Clean and Repair Receiving and Inspecting Cleaning and Repairs Required 1. Assess the competitive environment of Maple Hill Dairy Fam and determine what you think is or should be Maple Hill's competitive sategy and explain why. Evaluate Laua's plan to move from glass botles to plastic and paper containers 2. Deermine the unit costs for each of the five prodacts given the available infomation. How could you improve on hese calculations what additional information would your request and how would you use i 3. Use the infomation in the case above to detemine the ABC-based unit costs foe Maple Hill's prodacts. How does his infomation help Laua analyze her decision regaeding the change in comainers from glass to plastic and paper? + Maple Hill Dairy Fa....pdf Show all X Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. C The Crystal Coast O... Apps Crystal Coast Ocea... Implementation of Activity Based Costing for Sunny View Dairy Farm 2/6 CSAC 2510 Fall 2019 Maple Hill Dairy Farm Maple Hill Duiry Farm is a small, family-ouned business that started its operations in 1996 with the goal of using all- manural peocesses to ereate high quality dairy producs The company prodaces several different products sold in health food markes and some of the larger supermarkets in the arca as well s in the Maple Hill Country Store, a small retail store located nes to the farm Maple Hills prodacts are well-known for their quality nd have gained a strong brand oyalty theoughout the regicn in which Maple Hill operales A key competitive actor for Maple Hill is that is uses only glss boles in the packaging of its products, which appeals to many of its targeted customers Maple Hill's sales have grown rapidly in recent years, but prodacticn is curendly limited by the number and size of the facilities cn sile that can only accommodate 300 animals (of which 130 cows are part of the milking hend) As a result Maple Hill is considering expanding its operations to allow it to meet the increasing demand for its prodacts In oeder expand, Maple Hill would have to buy additional lnd, build more bans ind enlarge the milking facility. Maple Hill's mnager, Laur Asaley, is concerned about the potentially large financial outlays that Maple Hill would incur with expansion and she feels that she should examine whether or not current operations are efficient and cost effective before expanding Laura is aso considering the possibility ef packaging the farm's product in plastic d paper containers instead of glas bottles. She expects that this would attract new customers, nd in addition, i would reduce costs significantly. The direct cost of packaging the prodact (now S.75 per bottle) would be about cne-third the curent cost, ind the cost of the bottling equipment foe filling the plastic or paper containers would fall to one-half the cost of he cument equipment within 6-month time All oher costs would remain the same. Also, Laura thinks the sales of the famm's prodacts would grow even faster with the beoadened product line -the beand reputation of the frm's preducts could be leveraged to bring in new cusiomers, nd the use of plastic or paper containers would enable the farm to atract new supermarkets and other retailers thut do not preseatly handle boles Laura thinks that the supemarket customers would be willing to pay at least S.40 per quart more foe Maple Hill products relative to other store brands. Laura subscribes to the relevant trade journals in dairy farming and has excerpted the following infoemation from a recent issue of one of her journals shous the buying eriteria of a sample of supermaket customers who were purchasing milk in plastic and paper containers (1most important, and 5= least important). The curest supermarket prices for these products in Maple Hill's area are S1.25 per quart for ech product escept eggmog which sells foe $1.80. Supermarkets mark up the peice of milk by about 40% from dairy cost, so the peice received by the dairy is somewhat less Attribute Importance Ranking, by Product Whole Low-Fat Skim Chocolate Buying Criteria Milk Milk Milk Eggneg Freshness 3 3 2 4 4 Packaging 4 4 3 2 3 Tale 2 1 Color and Texture 4 3 2 1 2 Price 1 + Background about Maple Hill's Operations The main processes involvad in milk peoduction are as follows I.Milking An employee begins by sanitizing the cows. Once this is done, the employee amaches the cows to electnic milking machine. The machine automatically provides information on the number of gallons prodaced by each cow and pumps the mik into a holding tank before the next peocess begins. This is a very time Maple Hill Dairy Fa....pdf a Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf How Policygenius .. SNew Tab C The Crystal Coast O.. Crystal Coast Ocea... Apps Implementation of Activity Based Costing for Sunny View Dairy Farm 4/6 Fall 2019 except for bottling equipment The accounts, sub-accounts and costs for the most recent operating year are shown in Table These costs are often called resouree costs, nd are labeled as such in the OROS sotware system Maple Hill grows on site most of the feed needed at the dairy farm. The cost of peoducing he feed and some additional feed purchased during the year is included under labor and materials for other processing costs. Table I: Overhead (Resource) Costs for Maple Hill Dairy Farm ACCOUNTS Bottling Equipment Oer Facilities Costs SUB ACCOUNTS ACTUAL COSTS S1528,6204 Uileies Depreciation Property Tax 72,395 22,976 10.014 Total Oher Facilities Cost s105385 Labor and malerials 428,800 4.278 Oher Processing Costs Supplies Equipment repairs and maintonance 21,565 13.688 Depreciation Total Oher Processing Cost Kieneral and Administrative Administration 468,33 105,522 23.471 Interest Expenue Total General nd Administrative Toal 128.993 2231,329 In addition to the overhead costs, Maple Hill hs direct costs for bottles and other materials. These materials are purchased from a variety of suppliers Each glass bottle costs Maple Hill S.75, including both purchase nd recyeling cost Oher ingredients inclade cocoa, sugar, and spices Cocoa, used in the prodaction of chocolate milk, casts S.05 per bottle. Sugar, used in both chocolate milk and eggnog, costs S.05 per bottle. Spices, used to make eggaog, cost S.08 per bottle. total, 65,700 ounces of sugar nd cocoa were used in the production of chocolate milk, and 76,650 ounces of sugar and spice were used in the producticn of eggnog Laura has heard from a local vendoe that information from an sctivity-bsed costing would be helpful to Laur nimproving Maple Hill's operations With some guidance from a cost consulant recommended by the vendor, the following peodaction activities were identified Milking Separting, pasteurizing, nd homogenizing Mixing Bottling Warehousing General and Administrative (G&A) Receiving nd Inspecting Cleaning and Repairs + Overhed (Resource-consumption Cost Drivers Laura has further analyzed the cost structure, to desemmine how the overhead (resource) costs could be allocaned to the eight activities idenified above. On the advice of the cost consultant, e detemined that all costs in the general and Maple Hill Dairy Fa....pdf ^ Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O C UAssign Introdu x c Get Ho x X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. Apps Crystal Coast Ocea... The Crystal Coast O... Implementation of Activity Based Costing for Sunny View Dairy Farm 5/6 CSAC 2510 Fall 2019 administrative account could be allocated to the general and administrative activity. Morcover, most (90%) of the costs the boling machine account could be allocated to the bottling activity, and the remainder to the receiving and inspecting activity. Deemining how the other processing costs could be related to the activities is not as simple, but after some careful study the following etimes were made for the other processing costs account % Usage of Ocher Aetivities Using Ocher Processing Costs Processing Casts Milking 30% Seperating Pasteurizing Homogeaizing 15% Mixing Bottling 15% a5% Wrehousing 10% G&A 0% Recciving and Inpecting Ineredients 0% Cleaning and Repairs Toal 00% The other facilities cost account includes the costs of maintaining the warehouse and milking barn, and is allocated to he activities on the basis of square feet. facilities cost account, which is one of Maple Hill's overhead (resource) accounts. Square feet is erefore the resource-consumpticn cost driver for the other Activities Square Ft Milking Separating Pasteurizing Homogenizing i0.000k 2000 Mixing 1,000 Bottling 1,500 warchousing 12.500 G&A t000 Cleaning and Repairs 1,000 30.000 Toal + Activity-consumption Cost Drivers After some additicnal study, it was decided that the best way to allocate the costs of each activity to the products was to use the follouing activity-consumption drivers Maple Hill Dairy Fa....pdf ^ Show all Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 C UAssign Introdu x C Get Ho Xx X S Implem X ImplemX As Ask.cor x G maple X The Cr X case1 Search X New Tab File C:/Users/hp/Downloads/Maple%20Hill%20 Dairy%20Farm%20-%20Group%20Case%20Assignment.pdf New Tab How Policygenius .. C The Crystal Coast O... Apps Crystal Coast Ocea... Implementation of Activity Based Costing for Sunny View Dairy Farm 6/6 CSAC 2510 Fall 201 Activities Activity-consumption Cost Driver Number of botles produced Machine Hours Separating Machine Hours, Mising Milking Separaing Pastcurizing Homoacaizing Mising Boltling Machine Hours, Boling Labor Hours, Warehousing Warehousing G&A INumber of Invoices Ounces Labor Hours, Clean and Repair Receiving and Inspecting Cleaning and Repairs Required 1. Assess the competitive environment of Maple Hill Dairy Fam and determine what you think is or should be Maple Hill's competitive sategy and explain why. Evaluate Laua's plan to move from glass botles to plastic and paper containers 2. Deermine the unit costs for each of the five prodacts given the available infomation. How could you improve on hese calculations what additional information would your request and how would you use i 3. Use the infomation in the case above to detemine the ABC-based unit costs foe Maple Hill's prodacts. How does his infomation help Laua analyze her decision regaeding the change in comainers from glass to plastic and paper? + Maple Hill Dairy Fa....pdf Show all X Crystal Coast Ocea....pdf ^ Maple Hill Dairy F...pdf ^ 16:03 O Type here to search N xENG 99+ 09-11-2019 O