Solution-Calculate activity-based costs and profits for

Calculate activity-based costs and profits for each contract

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Reference no: EM132614696

Company XYZ has two fixed price contracts for two different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable.

Data as follows:

Customer AAA BBB

Component Type A 999 B 999

Contract Value ($) $27,000 $100,000

Contract Quantity 1,000 units 2,000 units

Material cost/unit $15 $20

Molding time/batch 5 hours 7.5 hours

Batch size 100 units 50 units

Annual Budgeted overheads as follows:

Activity Cost driver Cost driver volume/year

Cost Pool Molding Molding hours 2,000 $150,000

Inspection Batches 150 $75,000

Production Mgmt Contracts 20 $125,000

Required:

Question 1: Calculate the activity-based costs and profits for each contract.

Reference no: EM132614696

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Calculate activity-based costs and profits for each contract

Reference no: EM132614696

Reference no: EM132614696

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