Determine the cost of each product line

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Reference no: EM13662802

Evaluating product line costs and prices using ABC

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

PowerPunch SlimLife

Production volume ............ 12,500 bottles 37,000 gallons

Liquid materials ....................... 1,400 gallons 12,000 pounds

Dry materials ................... 620 pounds 180.000 bottles

Bottles .................................... 12,500 bottles I label per bottle

Labels ..................................... 3 labels per bottle 300 setups

Machine setups ........................ 500 setups 3.750 MH

Machine hours ........................... 200 MH

Additional data from its two production departments follow:

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

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

(Hint: Your answer should draw on the total cost for each product line computed in requirement 1.)

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

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

Reference no: EM13662802

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