Reference no: EM132507005

Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.

                                                      Hi-Voltage:                   EasySlim:

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

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

Question 2: What is the cost per bottle of Hi-Voltage? What is the cost per bottle of EasySlim? Hint: The answer should draw on the total cost for each product line computed in requirement 1.

Question 3: If Hi-Voltage sells for $3.75 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells?

Question 4: What is the minimum price that the company should set per bottle of EasySlim?