REQUIRED: YOU MUST SHOW ALL OF YOUR CALCULATIONS TO RECEIVE FULL CREDIT FOR YOUR WORK!

**Prepare and present a GROSS PROFIT REPORT showing the profitability of each product using traditional allocation procedures.

**Prepare and present a GROSS PROFIT REPORT showing the profitability of each product using ABC allocation procedures.

**Explain the differences between the answers that you have provided in questions (1) and (2).

**What suggestions would you make to management?

BRIXTON INDUSTRIES ABC CASE Brixton Industries makes three products: Widgets, Gadgets, and Helios. information relates to Brixton for the next year: The following budget WIDGETS Sales and production units Selling price per unit Direct labor and materials per unit Machine hours per unit in machine department Direct labor hours per unit in assembly department GADGETS HELIOS 50,000 $45 $32 2 7 40,000 $95 $84 5 3 30,000 $73 $65 4 2 Traditionally, overhead has been allocated to the two production departments using the following rates: Machining department: $1.20 per machine hour Assembly department: $0.825 per direct labor hour. However, you have determined that the overhead can be reorganized into cost pools as shown here with the appropriate cost drivers: COST POOL DOLLAR COST COST DRIVER QUANTITY Machining Services Assembly Services Set-up Costs Order Processing Purchasing 357,000 318,000 26,000 156,000 84,000 Machine hours Direct labor hours Set-ups Customer Orders Supplier Orders 420,000 530,000 520 32,000 11,200 In addition to the machine cost per hour and the assembly cost per hour given above, you have also been provided with the following estimates for the next year: WIDGETS Number of set-ups Customer Orders Supplier Orders GADGETS HELIOS 120 8,000 3,000 200 8,000 4,000 200 16,000 4,200 REQUIRED: YOU MUST SHOW ALL OF YOUR CALCULATIONS TO RECEIVE FULL CREDIT FOR YOUR WORK! 1) Prepare and present a GROSS PROFIT REPORT showing the profitability of each product using traditional allocation procedures. 2) Prepare and present a GROSS PROFIT REPORT showing the profitability of each product using ABC allocation procedures. 3) Explain the differences between the answers that you have provided in questions (1) and (2). 4) What suggestions would you make to management