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
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3 labels per bottle
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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.
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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?