BBB Component Type A999 B999 Contract Value ($) $27,000
Company XYZ has two fixed price contracts for two different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable.
Data as follows:
|
Customer |
AAA |
BBB |
|
Component Type |
A999 |
B999 |
|
Contract Value ($) |
$27,000 |
$100,000 |
|
Contract Quantity |
1,000 unit |
2,000 units |
|
Material cost/unit |
$15 |
$20 |
|
Molding time/batch |
5 hours |
7.5 hours |
|
Batch Size |
100 units |
50 units |
Annual Budgeted
|
Activity |
Cost Driver |
Cost Drover Volume/year |
Cost pool |
|
Molding |
Molding hours |
2,000 |
$150,000 |
|
Inspection |
Batches |
150 |
$75,000 |
|
Production Mgmt |
Contracts |
20 |
$125,000 |
Required:
A. Calculate the activity-based costs and profits for each contract.
There is not a word length requirement for this question; however, you must show your work.
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