Robert Pharmaceuticals manufactures an over-the-counter allergy medication called Breathe and is trying to win market share from Sudafed and Claritin. Robert Pharmaceuticals has developed several different Breathe products tailored to specific markets. For example, the company sells large commercial containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. Robert Pharmaceuticals' controller, Sandra Dean, has just returned from a conference on ABC. She asks Keith Yeung, supervisor of the Breathe product line, to help her develop an ABC system. Dean and Yeung identify the following activities, related costs, and cost allocation bases: (Click the icon to view the information.) Requirements Additional information 1. Compute the cost allocation rate for each activity 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) 3. Robert Pharmaceuticals' original single-allocation-based cost system allocated indirect costs to products at $380 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then, compute the indirect cost per unit for each product. 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. Activity Materials handling Packaging Estimated Estimated Indirect Allocation Quantity of Activity Costs Base Allocation Base 242,000 Kilograms....... 22,000 kg 462.000 Machine hours 2,100 hours 114,700 Samples 1,850 samples $ 818,700 Quality assurance Total indirect costs te the cost per unit.) (Round the cost per unit to the nearest cent.) Print Done The commercial-container Breathe product line had a total weight of 7,500 kilograms, used 1,050 machine hours, and required 260 samples. The travel-pack line had a total weight of 5,700 kilograms, used 350 machine hours, and required 410 samples. Robert produced 2,300 commercial containers of Breathe and 55,000 travel packs. Robert Pharmaceuticals manufactures an over-the-counter allergy medication called Breathe and is trying to win market share from Sudafed and Claritin. Robert Pharmaceuticals has developed several different Breathe products tailored to specific markets. For example, the company sells large commercial containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. Robert Pharmaceuticals' controller, Sandra Dean, has just returned from a conference on ABC. She asks Keith Yeung, supervisor of the Breathe product line, to help her develop an ABC system. Dean and Yeung identify the following activities, related costs, and cost allocation bases: (Click the icon to view the information.) Requirements Additional information 1. Compute the cost allocation rate for each activity 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) 3. Robert Pharmaceuticals' original single-allocation-based cost system allocated indirect costs to products at $380 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then, compute the indirect cost per unit for each product. 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. Activity Materials handling Packaging Estimated Estimated Indirect Allocation Quantity of Activity Costs Base Allocation Base 242,000 Kilograms....... 22,000 kg 462.000 Machine hours 2,100 hours 114,700 Samples 1,850 samples $ 818,700 Quality assurance Total indirect costs te the cost per unit.) (Round the cost per unit to the nearest cent.) Print Done The commercial-container Breathe product line had a total weight of 7,500 kilograms, used 1,050 machine hours, and required 260 samples. The travel-pack line had a total weight of 5,700 kilograms, used 350 machine hours, and required 410 samples. Robert produced 2,300 commercial containers of Breathe and 55,000 travel packs
