FINANCE

Required
1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

 

  Product A Product B
  Manufacturing cost per unit    

 

2. Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.)

 

     
  Product A    
  Product B    

 

3. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

 

  Product A Product B
  Number of setups required for production   10 setups   12 setups
  Number of parts required   1 part / unit   3 parts / unit
  Inspection hours required   40 hours   210 hours

 

  Product A Product B
  Manufacturing cost per unit    

 

4.1  Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)

 

     
  Product A    
  Product B    

 

Problem 17-1A Evaluating product line costs and prices using ABC L.O. P3

[The following information applies to the questions displayed below.]

Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow.

 

  PowerPunch SlimLife
  Production volume 12,500  bottles 180,000  bottles
  Liquid materials 1,400  gallons 37,000  gallons
  Dry materials 620  pounds 12,000  pounds
  Bottles 12,500  bottles 180,000  bottles
  Labels 3  labels per bottle 1  label per bottle
  Machine setups 500  setups 300  setups
  Machine hours 200  MH 3,750  MH

 

Additional data from its two production departments follow.

 

Department Driver Cost
  Mixing department          
        Liquid materials   Gallons   $ 2,304  
        Dry materials   Pounds     6,941  
        Utilities   Machine hours     1,422  
  Bottling department          
        Bottles   Units   $ 77,000  
        Labeling   Labels per bottle     6,525  
        Machine setup   Setups     20,000  

 

     
     

 

7.

Problem 17-1A Part 2

2. What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.)

 

  PowerPunch SlimLife
  Average cost per bottle        

 

 

9.

 

Problem 17-1A Part 4

4. What is the minimum price that the company should set per bottle of SlimLife?

 

  $0.53 per bottle
  $0.86 per bottle
  $0.36 per bottle

 

The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle.

 

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