Question

Problem 4-4A Evaluating product line costs and prices using ABC LO P3 (The following information applies to the questions displayed below.) Bright Day Company produces two beverages, Hi-Voltage and Easy Slim. Data about these products follow. Production volume Liquid materials Dry materials Bottles Hi-Voltage 10,500 bottles 1,000 gallons 620 pounds 10,500 bottles 5 labels per bottle 300 setups 140 MH EasySlim 240,000 bottles 37,000 gallons 13,000 pounds 240,000 bottles label(s) per bottle 800 setups 3,300 MH Labels Machine setups Machine hours Additional data from its two production departments follow. Driver cost Department Mixing department Liquid materials Dry materials Utilities Bottling department Bottles Labeling Machine setup Gallons Pounds Machine hours $ 2,280 8,853 1, 032 Units Labels per bottle Setups $75, 150 15,975 27,500

Answer 1

1 & 2.

						Hi-Voltage		EasySlim
Activity	Expected Costs	Expected Activity		Activity Rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Mixing department
Liquid materials	2280	38000	gallons	0.06	per gallon	1000	60	37000	2220
Dry materials	8853	13620	pounds	0.65	per pound	620	403	13000	8450
Utilities	1032	3440	machine hours	0.30	per machine hour	140	42	3300	990
Bottling department
Bottles	75150	250500	bottles	0.30	per bottle	10500	3150	240000	72000
Labeling	15975	532500	labels	0.03	per label	52500	1575	480000	14400
Machine setup	27500	1100	setups	25.00	per setup	300	7500	800	20000
Total cost of product line $							12730		118060
Number of bottles produced							10500		240000
Cost per bottle $							1.21		0.49

3.

	Hi-Voltage
Price per unit	6.35
Cost per unit	1.21
Profit per unit $	5.14