Problem 17-4A Evaluating product line costs and prices using ABC LO P3

Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.

	Hi-Voltage		EasySlim
Production volume	11,500	bottles	270,000	bottles
Liquid materials	1,400	gallons	35,000	gallons
Dry materials	1,020	pounds	3,000	pounds
Bottles	11,500	bottles	270,000	bottles
Labels	4	labels per bottle	3	label(s) per bottle
Machine setups	1,200	setups	700	setups
Machine hours	200	MH	3,600	MH

Additional data from its two production departments follow.

Department	Driver	Cost
Mixing department
Liquid materials	Gallons	$	2,548
Dry materials	Pounds		2,010
Utilities	Machine hours		1,900
Bottling department
Bottles	Units	$	84,450
Labeling	Labels per bottle		25,680
Machine setup	Setups		38,000

Required: 1 & 2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and EasySlim? 3. If Hi-Voltage sells for $6.35 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? 4. What is the minimum price that the company should set per bottle of EasySlim?