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Problem 04-4A Evaluating product line costs and prices using ABC LO P3 Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.     Hi-Voltage EasySlim Production volume 12,000 bottles 260,000 bottles Liquid materials 1,600 gallons 33,000 gallons Dry materials 1,120 pounds 12,000 pounds Bottles 12,000 bottles 260,000 bottles Labels 3 labels per bottle 2 label(s) per bottle Machine setups 1,000 setups 800 setups Machine hours 200 MH 3,450 MH   Additional data from its two production departments follow.   Department Driver Cost Mixing department         Liquid materials Gallons $ 1,384   Dry materials Pounds   5,904   Utilities Machine hours   1,460   Bottling department         Bottles Units $ 163,200   Labeling Labels per bottle   16,680   Machine setup Setups   27,000     Required: 1 & 2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and EasySlim? 3. If Hi-Voltage sells for $7.05 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 EasySlim?

Problem 04-4A Evaluating product line costs and prices using ABC LO P3 Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.     Hi-Voltage EasySlim Production volume 12,000 bottles 260,000 bottles Liquid materials 1,600 gallons 33,000 gallons Dry materials 1,120 pounds 12,000 pounds Bottles 12,000 bottles 260,000 bottles Labels 3 labels per bottle 2 label(s) per bottle Machine setups 1,000 setups 800 setups Machine hours 200 MH 3,450 MH   Additional data from its two production departments follow.   Department Driver Cost Mixing department         Liquid materials Gallons $ 1,384   Dry materials Pounds   5,904   Utilities Machine hours   1,460   Bottling department         Bottles Units $ 163,200   Labeling Labels per bottle   16,680   Machine setup Setups   27,000     Required: 1 & 2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and EasySlim? 3. If Hi-Voltage sells for $7.05 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 EasySlim?

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter10: Accounting Systems For Manufacturing Operations
Section: Chapter Questions
Problem 10.25E: Activity-based costing in an insurance company Umbrella Insurance Company carries three major lines...
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Problem 04-4A Evaluating product line costs and prices using ABC LO P3

Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.
 

  Hi-Voltage EasySlim
Production volume 12,000 bottles 260,000 bottles
Liquid materials 1,600 gallons 33,000 gallons
Dry materials 1,120 pounds 12,000 pounds
Bottles 12,000 bottles 260,000 bottles
Labels 3 labels per bottle 2 label(s) per bottle
Machine setups 1,000 setups 800 setups
Machine hours 200 MH 3,450 MH
 


Additional data from its two production departments follow.
 

Department Driver Cost
Mixing department        
Liquid materials Gallons $ 1,384  
Dry materials Pounds   5,904  
Utilities Machine hours   1,460  
Bottling department        
Bottles Units $ 163,200  
Labeling Labels per bottle   16,680  
Machine setup Setups   27,000  
 


Required:
1 & 2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and EasySlim?
3. If Hi-Voltage sells for $7.05 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 EasySlim?
 

 

 

Hi-Voltage Easys Activity driver incurred Overhead Activity Expected Costs Expected Activity Activity Rate Activity driver incurred assigned Mixing department Liquid materials $ 1,384 Gallons Dry materials 5,904 Pounds Utilities 1,460 Machine hours Bottling department Bottles $ 163,200 Bottles Labeling 16,680 Labels Machine setup 27,000 Setups
Transcribed Image Text:Hi-Voltage Easys Activity driver incurred Overhead Activity Expected Costs Expected Activity Activity Rate Activity driver incurred assigned Mixing department Liquid materials $ 1,384 Gallons Dry materials 5,904 Pounds Utilities 1,460 Machine hours Bottling department Bottles $ 163,200 Bottles Labeling 16,680 Labels Machine setup 27,000 Setups
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