Question

Describe the production characteristics (for example, high-volume, specialty, etc.) of the three products manufactured by Hydraulic Hoses, Inc. in the case study.

2. Describe the production characteristics (for example, high volume, specialty, etc.) of the three products manufactured by Hydraulic Hoses, Inc.

ATC 5-1 Business Applications Case Using ABC to improve product costing Hydraulic Hoses, Inc. produces specialized industrial hoses for applications such as high-pressure hydraulics and the transference of highly corrosive materials. The company recently implemented an ABC system for three of its products and is interested in evaluating its effectiveness before converting to an ABC system for all of its products. To perform this evaluation the company has compiled data for the three products using both the traditional system and the new ABC system. The traditional 250 Chapter 5 system uses a single driver (direct materials costs). The ABC system uses a variety of cost drivers related to the activities used to produce the metal products. The three products involved in the trial run of the ABC system were D-13, K-17, and R-23. The following data relate to these products Selling Price per Unit Total Costs Allocated Traditional Costing Units Produced Cost per Unit: Traditional Total Cost Allocated ABC Cost per Unit ABC Product Costing D-13 K-17 R-23 Totals $14.65 15.60 18.50 250,000 $2,100,000 1,280,000 214,500 $8.40 $2,000,000 8.00 8.82 140,000 0,000 9.14 10.73 1,235,000 359,500 17.98 3,594,500 3,594,500

Answer 1