Question
In 1990 Bridgeton Industries produced three products at its Automotive Component & Fabrication (ACF) Plant: Fuel Tanks, Manifolds, and Doors. Use the information below to
In 1990 Bridgeton Industries produced three products at its Automotive Component & Fabrication (ACF) Plant: Fuel Tanks, Manifolds, and Doors. Use the information below to respond to the following:
A.Complete the 1990 pro-forma by-product income statement, given the existing cost system in the case.
B. For each product, calculate the budgeted sales price per unit, full-absorption cost per unit, contribution margin (revenues minus variable costs) per unit, and profit per-unit.
C. Assuming no other changes, evaluate the following statement about Bridgetons cost system: We should switch to machine hours as our cost driver for factory overhead to reduce RUCAG.
D.Calculate the percentage of each activity driver in the Activity Analysis Table that each cost object consumes. Using the results, determine the number of indirect cost pools you think is needed for a multiple-allocation-base system.
E. Calculate the reported unit cost for each product using a multiple-allocation-base cost approach. Identify all important components of your system (cost pools, cost objects, cost drivers, etc.) and explain the design choices (e.g., number of cost pools, cost drivers) that you make.
1990 Pro-Forma Income Statement, by Product
Bridgeton Industries Automotive Component & Fabrication Plant
|
| Fuel Tanks | Manifolds | Doors | |||
| Revenues |
| $83,535 |
| $93,120 |
| $49,887 |
| Direct labor | 4,599 |
| 6,540 |
| 2,963 |
|
| Direct materials | 16,996 |
| 35,725 |
| 16,825 |
|
| Factory overhead* |
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| Cost of Goods Sold |
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| Gross Margin |
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*Allocated based on budgeted direct labor dollars.
Other 1990 Information
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| Fuel Tanks | Manifolds | Doors |
| Units budgeted, produced, and sold | 5,427 | 7,532 | 10,420 |
| Machine hours per unit | 0.60 | 0.62 | 0.20 |
Available machine hours: 15,000
Activity Analysis Data
|
Activity |
Driver | Consumption by | Total Activity Cost | ||
| Fuel Tanks | Manifolds | Doors | |||
| Run machines | Machine hours |
|
|
| $21,153 |
| Maintenance | Maintenance hours | 163.1 | 231.9 | 105.1 | 10,000 |
| Quality control | Number of rejects | 45 | 25 | 5 | 5,670 |
| Set up | Set up hours | 32.6 | 46.4 | 21.0 | 2,710 |
| Supply material | Receipts | 72 | 98 | 130 | 3,040 |
| Pack and ship | Shipments | 55 | 75 | 100 | 1,565 |
| Plant safety | % of revenues |
|
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| 7,130 |
| Provide personnel | Direct labor dollars |
|
|
| 9,435 |
| Provide facilities | Square feet | 20,000 | 10,000 | 50,000 | 18,680 |
| Total Indirect Costs | $79,383 | ||||
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