Corbertt Pharmaceuticals manufactures an over-the-counter allergy medication called Breathe Corbertt is trying to win market Corbertt's controller, Samatha Dean, has just returned trom a conterence on ABC She asks Kade Yang, supervisor of the share trom Sudated and Tylenol. The ccmpany has developed several ditterent Breathe products tailored to specitic markets. For Breathe product line, to help her develop an ABC system. Dean and Yang identty the tollowing activities, related costs, and example, the company sells large commercial containers of 1,000 capsules to hcalth-care facilites and travel packs of 20 capsules to shops in airports, train stations, and hotes. allocation bases Ell (Click the icon to view the intormation ) Read the requirements Kequirement 1. Deteirne Uie forrnula, trven compute the cost allocaion tale Tor eaci activity. Hournd your answers to tie nearest whole dollar. Abbreviaboris used. Mal. Materials, GA Quality assuraniCe) Estimated indirect activity cost 180000 430000 115000 Total plantwide overhead 16000 2500 1250 Actvity cost al location rate 10 12per hour 92 per sample Data Table Mal hand ing Packag ng OA Requirement 2. Usc the activity-bascd cost allocation rates to compute the indircct cost of cach unit of the commercial containers and the per kilo 9 Estimated Indirect Allocation Estimated Quantity Activity Materials handling Packaging Quality assurance Total indirect costs Activity Costs Base of Allocation Base Round the cost per unit to the nearest cent) 160,000 Kilos 30 000 Machine hours 2,500 hours 115000 Samples 705,000 16 000 kilos Commercial Contalner Travel Pack 8729 6204 1,250 samples Matcria's handling Packaging Quality assuranoo Total indirect costs l Number of units Indirect activity cost per unit The commercial-container Breathe product line had a total weight of 8,729 kilos, USed 900 machine hours and required 230 samples The travel-pack line had a total weight of 6,204 kilos, used 300 machine hours and required 330 samples. Corbertt produced 4,050 commercial containers of Breathe and 60,000 travel packs Requirement 3. The company's original single allocation based cost system allocated indirect costs to products at $450 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system Then compute the indirect cost per unit for each product Indirect cost Product Estimated total indirect cost x Estimated qty of the allocation baseallocated Commercial Travel Now compute the indirect cost per unit for each product under the original single-allocation base system. (Round the cost per unit to the nearest cent.) Commercial Container Travel Pack Total indirect costs allocated Number of units Indirect cost per unit Requirement 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did The original system The original system allocated the commercial containers and the travel packs. .However, commercial containers | The ABC system | SO, relative to te original systern, ABC allocates | 1 of the matenal handling and quality assurance costs to commercial containe
