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:

CustomerAAABBB

Component TypeA999B999

Contract Value($)$27,000$100,000

Contract Quantity1,000 unit2,000 units

Materialcost/unit$15$20

Molding time/batch5 hours7.5hours

Batch Size100 units50 units

Annual Budgeted overheads as follows:

ActivityCost DriverCostdriverCost

volume/yearpool

MoldingMolding hours2,000$150,000

InspectionBatches150$75,000

ProductionMgmtContracts20$125,000

Required:

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.