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CVP with Activity-Based Costing and Multiple Products

Busy-Bee Baking Company produces a variety of breads. The plant manager would like to expand production into sweet rolls as well. The average price of a loaf of bread is $1. Anticipated price for a package of sweet rolls is $1.50. Costs for the new level of production are as follows:

Cost Driver	Unit Variable Cost	Level of Cost Driver
Loaf of bread	$0.65
Package of sweet rolls	$0.93
Setups	$300	250
Maintenance hours	$15	3,500

Other data:
Total fixed costs (traditional)	$185,000
Total fixed costs (ABC)	57,500

Busy-Bee believes it can sell 600,000 loaves of bread and 200,000 packages of sweet rolls in the coming year.

Required:

Question Content Area

1. Prepare a contribution-margin-based income statement for next year. Be sure to show sales and variable costs by product and in total.

blank Busy-Bee Baking Company Contribution-Margin-Based Income Statement

	Bread	Sweet Rolls	Total
Contribution marginFixed costsSalesVariable cost	$- Select -	$- Select -	$- Select -
Less: Contribution marginLess: Fixed costsLess: SalesLess: Variable cost	- Select -	- Select -	- Select -
Contribution marginFixed costsSalesVariable cost	$- Select -	$- Select -	$- Select -
Less: Contribution marginLess: Fixed costsLess: SalesLess: Variable cost			- Select -
Operating incomeOperating loss			$- Select -

Question Content Area

2. Compute the break-even sales for the company as a whole using conventional analysis. Round your answer to the nearest dollar. $fill in the blank b7122500607eff4_1

3. Compute the break-even sales for the company as a whole using activity-based analysis. Round your answer to the nearest dollar. $fill in the blank b7122500607eff4_2

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