Question
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
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 | 10,500 | bottles | 240,000 | bottles |
Liquid materials | 800 | gallons | 25,000 | gallons |
Dry materials | 1,020 | pounds | 15,000 | pounds |
Bottles | 10,500 | bottles | 240,000 | bottles |
Labels | 3 | labels per bottle | 3 | label(s) per bottle |
Machine setups | 900 | setups | 900 | setups |
Machine hours | 190 | MH | 3,900 | MH |
Additional data from its two production departments follow.
Department | Driver | Cost | ||
Mixing department | ||||
Liquid materials | Gallons | $ | 2,322 | |
Dry materials | Pounds | 7,209 | ||
Utilities | Machine hours | 2,454 | ||
Bottling department | ||||
Bottles | Units | $ | 100,200 | |
Labeling | Labels per bottle | 22,545 | ||
Machine setup | Setups | 63,000 | ||
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 $6.25 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?
Req 1 to 2 Req 3 Req 4 Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and Easy Slim? (Do not round your intermediate calculations. Round "Activity Rate" and "Average cost per bottle" a to 2 decimal places.) Hi-Voltage Easy Slim Activity driver Overhead incurred assigned Activity Expected Costs Overhead Expected Activity Activity Rate Activity driver incurred assigned $ o Gallons Mixing department Liquid materials Dry materials Utilities 2,322 7,209 2,454 0 Pounds Machine hours $ 100,200 Bottles Bottling department Bottles Labeling Machine setup 22,545 Labels 63,000 Setups Reg 1 to 2 Req3 > Complete this question by entering your answers in the tabs below. Req 1 to 2 Req3 Reg 4 If Hi-Voltage sells for $6.25 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? (Do not round intermediate calculations and round your final answers to 2 decimal places.) Hi-Voltage Price per unit Cost per unit Profit (loss) per unit Complete this question by entering your answers in the tabs below. Req 1 to 2 Req 3 Req 4 What is the minimum price that the company should set per bottle of Easy Slim? What is the minimum price that the company should set per bottle of Easy Slim?Step by Step Solution
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