90.2K

Verified Solution

Link Copied!

Problem 04-4A Evaluating product line costs and prices using ABC LO P3 Bright Day Company produces two beverages, Hi-Voltage and Easy Slim. Data about these products follow. Production volume Liquid materials Dry materials Bottles Labels Machine setups Machine hours Hi-Voltage 12,000 bottles 1,600 gallons 820 pounds 12,000 bottles 4 labels per bottle 800 setups 120 MH EasySlim 230,000 bottles 23,000 gallons 4,000 pounds 230,000 bottles 2 label(s) per bottle 500 setups 3,300 MH Additional data from its two production departments follow. Driver Cost $ Department Mixing department Liquid materials Dry materials Utilities Bottling department Bottles Labeling Machine setup 984 2,892 1,026 Gallons Pounds Machine hours Units Labels per bottle Setups $145,200 25,400 45,500 Required: 1 & 2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and Easy Slim? 3. If Hi-Voltage sells for $6.05 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? 4. What is the minimum price that the company should set per bottle of Easy Slim? Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and Easy Slim? (Do not round your intermediate calculations. Round "Activity Rate" and "Average cost per bottle" answers to 2 decimal places.) Hi-Voltage Easy Slim Activity Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead Activity driver Overhead assigned incurred assigned Mixing department Liquid materials Gallons Dry materials Pounds Utilities Machine hours Bottling department Bottles Bottles Labeling Labels Machine setup Setups Req 1 to 2 Reg 3 Reg 4 If Hi-Voltage sells for $6.05 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? (Do not round intermediate calculations and round your final answers to 2 decimal places.) Hi-Voltage Price per unit Cost per unit Profit (loss) per unit Req 1 to 2 Reg 3 Reg 4 What is the minimum price that the company should set per bottle of Easy Slim? What is the minimum price that the company should set per bottle of Easy Slim?

Answer & Explanation Solved by verified expert

See Answer