Question
Resource Module (Projected General Ledger Costs of Manufacturing Process Associated with the Two Products) Materials $2,000,000 Salaries and wages 1,000,000 Energy 500,000 License fee (environmental)
Resource Module (Projected General Ledger Costs of Manufacturing Process Associated with the Two Products)
| Materials | $2,000,000 | |
| Salaries and wages | 1,000,000 | |
| Energy | 500,000 | |
| License fee (environmental) | 200,000 | |
| Environmental fines | 400,000 | |
| Depreciation, pollution control equipment | 100,000 | |
| $4,200,000 |
Activity Module
| Resource Driver (Percentage Usage) | ||||||||||||||
| Materials | Labor | Energy | Fees | Fines | ||||||||||
| Supervising process* | 0 | % | 10 | % | 0 | % | 0 | % | 0 | % | ||||
| Setting up | 3 | 20 | 14 | 0 | 0 | |||||||||
| Blending chemicals | 80 | 40 | 30 | 0 | 0 | |||||||||
| Producing waste | 10 | 8 | 10 | 0 | 0 | |||||||||
| Disposing of hazardous waste | 6 | 12 | 15 | 40 | 70 | |||||||||
| Inspecting products | 0 | 7 | 6 | 0 | 0 | |||||||||
| Releasing air contaminants | 0 | 0 | 0 | 60 | 30 | |||||||||
| Operating pollution control equipment | 1 | 3 | 25 | 0 | 0 | |||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||
*Secondary activity whose costs are assigned to primary activities in proportion to the labor time used.
Cost Object Module (Products and Projected Activity Usage)
| Cost Objects | Antibiotic XK1 | Antibiotic XK5 | ||
| Expected output (pounds) | 50,000 | 50,000 | ||
| Setup hours | 12,000 | 7,000 | ||
| Direct labor hours (blending) | 24,000 | 16,000 | ||
| Pounds of waste | 8,000 | 2,000 | ||
| Pounds of hazardous waste | 5,000 | 1,000 | ||
| Hours of inspection | 3,000 | 500 | ||
| Tons of air contaminants | 4.5 | 0.5 | ||
| Machine hours (pollution control) | 2,000 | 500 | ||
List of Activity Drivers
| Activity Drivers | Activity Capacity | |
| Setup hours | 20,000 | |
| Direct labor hours (blending) | 40,000 | * |
| Pounds of waste | 10,000 | * |
| Pounds of hazardous waste | 8,000 | |
| Hours of inspection | 4,000 | |
| Tons of air contaminants | 5 | * |
| Machine hours (pollution control) | 3,000 | |
*Capacity is flexible (i.e., acquired as needed, and always matches usage).
Capacity for other activities is acquired in advance of usage.
For example, setups are acquired in units (steps) of 950 hours.
Projected usage for setups equals practical capacity.
Calculate the cost per unit for each of the proposed products using primary activity rates. Round your answers to two decimal places.
Activity rates:
| Setting up | $fill in the blank a3f98f0c4036fdd_1 | per setup hr. |
| Blending chemicals | $fill in the blank a3f98f0c4036fdd_2 | per DLH |
| Producing waste | $fill in the blank a3f98f0c4036fdd_3 | per pound |
| Disposing of hazardous waste | $fill in the blank a3f98f0c4036fdd_4 | per pound |
| Inspecting products | $fill in the blank a3f98f0c4036fdd_5 | per insp. hr. |
| Releasing air contaminants | $fill in the blank a3f98f0c4036fdd_6 | per ton |
| Operating pollution control equipment | $fill in the blank a3f98f0c4036fdd_7 | per MHr |
5b. Calculate the environmental cost per unit and the quality cost per unit. What does this tell you about the relative desirability of the two products? Round your answers to two decimal places.
| Antibiotic XK1 | Antibiotic XK5 | |||
| Environmental cost per unit | $fill in the blank a3f98f0c4036fdd_8 | $fill in the blank a3f98f0c4036fdd_9 | ||
| Quality cost per unit | $fill in the blank a3f98f0c4036fdd_10 | $fill in the blank a3f98f0c4036fdd_11 | ||
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