Company XYZ has 2 fixed price contracts for 2 different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable. Using the information below, a) calculate the activity-based costs and profits for each contract (this requires more than one step) and b) calculate the profit for each job using absorption costing, absorbing overheads using molding hours:

Enter all answers in number format without commas, decimals, or dollar signs.

Customer	AAA	BBB
Component Type	A999	B999
Contract Value ($)	$27,000	$100,000
Contract Quantity	1,000 unit	2,000 unit
Material cost/unit	$15	$20
Molding time/batch	5 hours	7.5 hours
Batch size	100 units	50 units

Annual Budgeted Overheads
Activity	Cost Driver	Cost Driver Volume/Yr	Cost Pool
Molding	Molding hours	2,000	$150,000
Inspection	Batches	150	$75,000
Prod. Mgmt.	Contracts	20	$125,000

(Calculate cost per unit of cost driver)
Activity	Cost pool (a)	Cost Driver/Yr (b)	Cost/Unit of Cost Driver (a)/(b)
Molding	$150,000	2,000	A. $ /molding hr.
Inspection	$75,000	150	B. $ /batch
Prod. Mgmt.	$125,000	20	C. $ /contract

(Calculate the cost drivers consumed by each contract)
Cost driver	Customer AAA	Customer BBB
Batches	D.	E.
Molding hours	F.	G.
Contracts	1	1

(Calculate the costs and profit for each contract)
	Contract AAA	Contract BBB
Selling price	$27,000	$100,000
Materials	H. $	I. $
Molding	J. $	K. $
Inspection	L. $	M. $
Management	N. $	O. $
Total cost	P.	Q.
Profit/(Loss)	($3,000)	$11,250

(Multiply (total annual overheads/annual molding hour) by materials and then overheads)
(b)	Contract AAA	Contract BBB
Selling price	$27,000	$100,000
Materials	R. $	S. $
Overheads	T. $	U. $
Total Cost	V. $	W. $
Profit/(Loss)	$3,250	$7,500