Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Dato about t

Question

Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Dato about these products follow. Production volume Liquid materials Dry materials Bottles Labels Machine setups Machine hours Hi-Voltage 12,000 bottles 1,200 gallons 720 pounds 12,000 bottles EasySlim 210,000 bottles 31,000 gallons 6,000 pounds 210,000 bottles 4 labels per bottle 1,100 setups 200 MH 1 label per bottle 700 setups 3,750 MH Additional dato from its two production departments follow. Driver Cost Mixing department Liquid materials Dry materials Utilities Gallons Pounds Machine hours $ 1610 5,040 790 Bottling department Bottles Labeling Machine setup Units Labels per bottle Setups S 111.000 12,900 45,000

Explanation / Answer

Solution:

Part 1 & 2 – Cost of each product line and cost per bottle

Hi-Voltage

Easy Slim

Activity

Expected Costs (A)

Expected Activity (B)

Activity Rate (C = A/B)

Activity Driver Incurred (H)

Overhead Assigned (C*H)

Activity Driver Incurred (E)

Overhead Assigned (C*E)

Mixing department

Liquid materials

$1,610

32200

Gallons

$0.05

per gallon

1200

$60

31000

$1,550

Dry materials

$5,040

6720

Pounds

$0.75

per pound

720

$540

6000

$4,500

Utilities

$790

3950

Machine Hours

$0.20

per machine hour

200

$40

3750

$750

Bottling department

$0

Bottles

$111,000

222000

Units

$0.50

per unit

12000

$6,000

210000

$105,000

Lebeling

$12,900

5

Labels per bottle

$2,580.00

per label per bottle

4

$10,320

1

$2,580

Machine Setup

$45,000

1800

Setup

$25.00

per setup

1100

$27,500

700

$17,500

Total Overhead Assigned (O)

$44,460

$131,880

Production Units (P)

12000

210000

Overhead assigned per unit (O/P)

3.71

0.63

Part 3 – Profit per bottle

Hi-Voltage

Price per unit

$6.45

Cost per unit (as calculated in part 1)

$3.71

Profit (loss) per unit

$2.74

Part 4 – Minimum price that the company should set per bottle for Easyslim

Minimum price means at which company recovers all the cost related to per bottle.

The minimum price will be the Overhead Cost per Bottle for EasySlim which is $0.63 per bottle.

The answer given in the question is $0.67 per bottle

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Hi-Voltage

Easy Slim

Activity

Expected Costs (A)

Expected Activity (B)

Activity Rate (C = A/B)

Activity Driver Incurred (H)

Overhead Assigned (C*H)

Activity Driver Incurred (E)

Overhead Assigned (C*E)

Mixing department

Liquid materials

$1,610

32200

Gallons

$0.05

per gallon

1200

$60

31000

$1,550

Dry materials

$5,040

6720

Pounds

$0.75

per pound

720

$540

6000

$4,500

Utilities

$790

3950

Machine Hours

$0.20

per machine hour

200

$40

3750

$750

Bottling department

$0

Bottles

$111,000

222000

Units

$0.50

per unit

12000

$6,000

210000

$105,000

Lebeling

$12,900

5

Labels per bottle

$2,580.00

per label per bottle

4

$10,320

1

$2,580

Machine Setup

$45,000

1800

Setup

$25.00

per setup

1100

$27,500

700

$17,500

Total Overhead Assigned (O)

$44,460

$131,880

Production Units (P)

12000

210000

Overhead assigned per unit (O/P)

3.71

0.63

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.