Schütt-die-Brüh-noh (SDBN), a German wine glass manufacturing company, produces two product linesof wine glasses. The basic line "Ortswein" is essentially aimed at normal customers who drink their dailyglass of wine at home and appreciate a reasonably priced product. The premium line "Großes Gewächsis aimed at the upscale wine drinker who appreciates the very high quality of the glass and is thereforewilling to pay significantly higher prices. The two lines are produced on the same machines with batchesof 700 Glasses per batch. The differences in the end products are achieved through different settingsand raw materials. Due to the higher quality requirements, the "Großes Gewächs" wine glasses requiremore time for the quality inspection conducted by several inspectors.The daily production data is as follows:Batches of glasses producedMachine hours per Batch of glassesDaily quality inspection hours per product lineTotal daily cost of quality inspectionBasic line"Ortswein"6214Premium line"Großes Gewächs"2,400 €2442Required:a. Calculate the quality inspection cost per batch of glasses using traditional absorption costing withnumber of machine hours as the allocation base.b. Calculate the quality inspection cost per batch of glasses using activity-based costing. Assumequality inspection time is the cost driver.c. Which of the methods used in (a) and (b) should SDBN use for pricing considerations & calculations?What would be your recommendation and why?

The distribution of costs which has been costed by the company overall in general requires to be…

a. Calculate the quality inspection cost per batch of glasses using traditional absorption costing with number of machine hours as the allocation base. b. Calculate the quality inspection cost per batch of glasses using activity-based costing. Assume quality inspection time is the cost driver. c. Which of the methods used in (a) and (b) should SDBN use for pricing considerations & calculations? What would be your recommendation and why?

a. Calculate the quality inspection cost per batch of glasses using traditional absorption costing with number of machine hours as the allocation base. b. Calculate the quality inspection cost per batch of glasses using activity-based costing. Assume quality inspection time is the cost driver. c. Which of the methods used in (a) and (b) should SDBN use for pricing considerations & calculations? What would be your recommendation and why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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