Fit & Active Company is adding a new diet food concentrate called Body Fit & Healthy to its line of bodybuilding and exercise products. A plant is being built for manufacturing the new product. Management has decided to price the new product based on a 100% markup on total manufacturing costs. A direct cost budget for the new plant projects that direct department costs of $7,152,500 will be incurred in producing an expected normal output of 750,000 pounds of finished product. In addition, indirect costs for Administration and Technical Supp will be shared by Body Fit & Healthy with the two exercise products divisions, Commercial Products and Retail Products. Budgeted annual data to be used in making the allocations are summarized here. Number of employees 10 Amount of technical supp time (hours) 690 Direct costs Indirect costs: Technical supp Administrative support Body Fit & Technical Commercial Retail Products Products Healthy 70 60 20 1,840 1,610 Administration Supp Total Direct costs are budgeted at $750,000 for the Administration Department and $500,000 for the Technical Supp Department. Required Answer Answer Answer 4 a. Using the step method, determine the total direct and indirect costs of Body Fit & Healthy. (Administration costs are allocated based on number of employees; Technical Supp costs are allocated based on technical supp time.) Body Fit & Healthy Answer 460 b. Determine the selling price per pound of Body Fit & Healthy. Note: Round your answer to two decimal places (for example, round $8.55555 to $8.56). SAnswer per pound
Fit & Active Company is adding a new diet food concentrate called Body Fit & Healthy to its line of bodybuilding and exercise products. A plant is being built for manufacturing the new product. Management has decided to price the new product based on a 100% markup on total manufacturing costs. A direct cost budget for the new plant projects that direct department costs of $7,152,500 will be incurred in producing an expected normal output of 750,000 pounds of finished product. In addition, indirect costs for Administration and Technical Supp will be shared by Body Fit & Healthy with the two exercise products divisions, Commercial Products and Retail Products. Budgeted annual data to be used in making the allocations are summarized here. Number of employees 10 Amount of technical supp time (hours) 690 Direct costs Indirect costs: Technical supp Administrative support Body Fit & Technical Commercial Retail Products Products Healthy 70 60 20 1,840 1,610 Administration Supp Total Direct costs are budgeted at $750,000 for the Administration Department and $500,000 for the Technical Supp Department. Required Answer Answer Answer 4 a. Using the step method, determine the total direct and indirect costs of Body Fit & Healthy. (Administration costs are allocated based on number of employees; Technical Supp costs are allocated based on technical supp time.) Body Fit & Healthy Answer 460 b. Determine the selling price per pound of Body Fit & Healthy. Note: Round your answer to two decimal places (for example, round $8.55555 to $8.56). SAnswer per pound
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Fit & Active Company is adding a new diet food concentrate called Body Fit & Healthy to its line of bodybuilding and exercise products. A plant is being built for manufacturing the new product. Management has decided to price the new product based
on a 100% markup on total manufacturing costs. A direct cost budget for the new plant projects that direct department costs of $7,152,500 will be incurred in producing an expected normal output of 750,000 pounds of finished product. In addition,
indirect costs for Administration and Technical Supp will be shared by Body Fit & Healthy with the two exercise products divisions, Commercial Products and Retail Products. Budgeted annual data to be used in making the allocations are summarized
here.
Number of employees
Amount of technical supp time (hours) 690
Direct costs
Indirect costs:
Technical supp
Administration Supp
4
Answer
Administrative support Answer
Answer
Total
Body
Technical Commercial Retail Fit &
Products Products Healthy
60
20
1,610
10
Direct costs are budgeted at $750,000 for the Administration Department and $500,000 for the Technical Supp Department.
Required
a. Using the step method, determine the total direct and indirect costs of Body Fit & Healthy. (Administration costs are allocated based on number of employees; Technical Supp costs are allocated based on technical supp time.)
Body Fit
& Healthy
Answer
70
1,840
460
b. Determine the selling price per pound of Body Fit & Healthy.
Note: Round your answer to two decimal places (for example, round $8.55555 to $8.56).
SAnswer per pound
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