Solution-Determine the cost of each product line using abc

Determine the cost of each product line using abc

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Reference no: EM131876336

Problem - Health Drinks Company produces two beverages, PowerPunch and SlimLife. Data about these products follow.

	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

Required -

1. Determine the cost of each product line using ABC.

2. What is the cost per bottle for PowerPunch? What is the cost per bottle of SlimLife?

3. If PowerPunch sells for $3.75 per bottle, how much profit does the company earn per bottle of PowerPunch that it sells?

Reference no: EM131876336

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Determine the cost of each product line using abc

Reference no: EM131876336

Reference no: EM131876336

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