The Sompter Meter Company has improved its production planning schedule and would like to go this over with you from a financial standpoint. The four products are made and their costs are shown below:

Product	Raw Material Cost	Price	Minimum Demand	Maximum Demand
($/Unit)	($/Unit)	(Units per Month)	(Units per Month)
Product A	$1.20	$8.00	500	800
Product B	$2.50	$12.00	250	400
Product C	$3.50	$25.00	50	100
Product D	$4.50	$30.00	30	50

The time taken to make each product is also shown below:

Time Taken for Assembly
Product A	3	mins/unit
Product B	6	mins/unit
Product C	15	mins/unit
Product D	18	mins/unit

Monthly Overhead costs as well as the number of workers in the facility and their hourly pay rates are given in the following table below:

Overhead Costs (Monthly)	Number of Workers	Hourly Pay rate
$5,000.00	3	$12.00

The production plan calls for product A -700, B-350, C-80 and D-42 to be made. Calculate the following using the traditional method of accounting:

• How long does it take for each product to be made based on the production plan?
• Raw Material Cost per product?
• Labor Costs of Plan per product?
• Allocated overhead costs per product? (Please use the fractional labor hours here to determine this)
• Total cost per product?
• Total revenue generated by product?
• Profit per product?
• Unit Profit per product?
• Total Profit Generated by production plan?

Part II (10 points)

Activity Based Costing

The overhead cost is now being allocated based on the following table below:

Category	Plant and Equipment	Management	Purchasing	Sales and Shipping
Total Cost	$700.00	$2,200.00	$600.00	$1,500.00
Cost Allocation	Square feet	Labor hours	Purchase orders	Customer orders
Total units used	10000	2400	130	91
Product A	1000	500	10	5
Product B	2000	450	35	20
Product C	3000	690	60	41
Product D	4000	760	25	25

Determine the following based on the original production plan (product A -700, B-350, C-80 and D-42):

• Plan and equipment cost per product?
• Management costs per product?
• Purchasing Costs?
• Sales and shipping cost?
• Total allocated overhead cost?
• Profit per product?
• Unit profit per product?
• Total Profit of production plan?
• Do you have any suggestions for the Sompter Meter Companys production plan?