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Problem 3: ABC Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. The following additional data apply BRASSCHROME WHITE
Problem 3: ABC Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. The following additional data apply BRASSCHROME WHITE 30,000 Projected sales in units 50,000 40,000 $40 $15 $12 $20 $3 $3 $30 Selling price Direct materials Direct labor Overhead cost based on direct labor hours (current system) $9 Direct labor hours Machine hours Setup hours Inspection hours 40 25 1.0 30 10 25 0.5 20 30 10 1.0 20 Average call length Number of calls for support 6 minutes 1,000 3 minutes 9 minutes 1,000 5,000 Total overhead costs and activity levels for the vear are estimated as follows: Activity Direct labor hours Machine hours Setups Inspections Call center support 2,900 hours 2,400 hours 95 setup hours 2,700 inspection hours 7000 call:s $465,500 $405,000 $140,000 NOTE - Round all answers and calculations to the nearest cent (two decimal places). You should assume 100% productivity (ie. no idle time) Brilliant needs to understand ABC, including 1) the activity-cost-driver rate for setup costs, inspection costs, and call center support. 2) the estimated operating profit per unit for each product line, using ABC. 3) assuming Brilliant decides to use the average call length to assign call center support costs, the amount of callcenter support costs assigned to each product line under this revised ABC system
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