In 1990 Bridgeton Industries produced three products at itsAutomotive Component & Fabrication (ACF) Plant: Fuel Tanks,Manifolds, and Doors. Use the information below to respond to thefollowing:
A.Complete the 1990 pro-formaby-product income statement, given the existing cost system in thecase.
B. For each product, calculate thebudgeted sales price per unit, full-absorption cost per unit,contribution margin (revenues minus variable costs) per unit, andprofit per-unit.
C. Assuming no other changes, evaluatethe following statement about Bridgeton’s cost system: “Weshould switch to machine hours as our cost driver for factoryoverhead to reduce RUCAG.”
D.Calculate the percentage of eachactivity driver in the Activity Analysis Table that each costobject consumes. Using the results, determine the number ofindirect cost pools you think is needed for amultiple-allocation-base system.
E. Calculate the reported unit costfor each product using a multiple-allocation-base cost approach.Identify all important components of your system (cost pools, costobjects, cost drivers, etc.) and explain the design choices (e.g.,number of cost pools, cost drivers) that you make.
1990 Pro-Forma Income Statement, by Product
Bridgeton IndustriesAutomotive Component & Fabrication Plant
| Fuel Tanks | Manifolds | Doors |
Revenues | | $83,535 | | $93,120 | | $49,887 |
Direct labor | 4,599 | | 6,540 | | 2,963 | |
Direct materials | 16,996 | | 35,725 | | 16,825 | |
Factory overhead* | | | | | | |
Cost of GoodsSold | | | | | | |
Gross Margin | | | | | | |
*Allocated based on budgeted directlabor dollars.
Other 1990 Information
| Fuel Tanks | Manifolds | Doors |
Units budgeted, produced, andsold | 5,427 | 7,532 | 10,420 |
Machine hours per unit | 0.60 | 0.62 | 0.20 |
Available machinehours: 15,000
Activity Analysis Data
Activity | Driver | Consumption by | Total ActivityCost |
Fuel Tanks | Manifolds | Doors |
Run machines | Machine hours | | | | $21,153 |
Maintenance | Maintenance hours | 163.1 | 231.9 | 105.1 | 10,000 |
Quality control | Number of rejects | 45 | 25 | 5 | 5,670 |
Set up | Set up hours | 32.6 | 46.4 | 21.0 | 2,710 |
Supply material | Receipts | 72 | 98 | 130 | 3,040 |
Pack and ship | Shipments | 55 | 75 | 100 | 1,565 |
Plant safety | % of revenues | | | | 7,130 |
Provide personnel | Direct labor dollars | | | | 9,435 |
Provide facilities | Square feet | 20,000 | 10,000 | 50,000 | 18,680 |
Total Indirect Costs | $79,383 |
