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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

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:

Customer AAA BBB

Component Type A999 B999

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

Contract Quantity 1,000 unit 2,000 units

Material cost/unit $15 $20

Molding time/batch 5 hours 7.5 hours

Batch Size 100 units 50 units

Annual Budgeted overheads as follows:

Activity Cost Driver Cost Driver Volume/Year Cost Pool

Molding Molding hours 2,000 $150,000

Inspection Batches 150 $75,000

Production Mgmt Contracts 20 $125,000

I need help with:

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

Please provide showing of the work so I can understand.

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