Company XYZ has two fixed price contracts for two different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable.

Data as follows:

CustomerAAABBBComponent TypeA999B999Contract Value ($)$27,000$100,000Contract Quantity1,000 units2,000 unitsMaterial cost/unit$15$20Molding time/batch5 hours7.5 hoursBatch size100 units50 units

Annual Budgeted overheads as follows:

ActivityCost driverCost driver

volume/year

Cost PoolMoldingMolding hours2,000$150,000InspectionBatches150

$75,000Production MgmtContracts20$125,000Required:

1. Calculate the activity-based costs and profits for each contract.

There is not a word length requirement for this question; however, you must show your work.