Title: Cases In Cost Management: A Strategic Emphasis Author: John K. Shank Case: Tijuana Bronze Machining Description: Product Profitability Analysis With Abc

2871 words - 11 pages

Untitled

Tijuana Bronze Manufacturing

Question 1:

Total Manufacturing Overhead

$682,688

Overhead per dollar of labor

$4.39

Product Cost per Unit

VALVES

Material

$16.00

Labor

> (7,500*16*.25) / 7,500

$4.00

Overhead

> .25*16*4.39

$17.56

Total

> 16 + 4 + 17.56

$37.56

PUMPS

Material

$20.00

Labor

> (12,500*16*.5)/12,500

$8.00

Overhead

> .50*16*4.39

$35.12

Total

> 20 + 8 + 35.12

$63.12

FLOW CONTROLLERS

Material

$22.00

Labor

> (4,000*16*.4)/4,000

$6.40

Overhead

> .40*16*4.39

$28.10

Total

> 22 + 6.40 + 14.05

$56.50

Question 2:

QUESTION TWO:

Contribution Margin for the Three Products

Valves

Pumps

Flow Controllers

Revenue / unit

$57.78

$81.26

$97.07

Var Cost / unit

$16.00

$20.00

$22.00

Var Labor Cost / unit

$4.00

$8.00

$6.40

Contribution Margin

$37.78

$53.26

$68.67

Question 3:

QUESTION THREE

Allocated Material Overhead is $220,000 (receiving and materials handling)

Remaining Material Overhead after receiving and material handling is $460,000

Valves

Pumps

Flow Controllers

Total

Materials cost / unit

$16.00

$20.00

$22.00

Materials total cost

$120,000.00

$250,000.00

$88,000.00

$458,000.00

Material cost percentage

26.20%

54.59%

19.21%

Allocated Material OH Cost

$57,641.92

$120,087.34

$42,270.74

$220,000

Allocated Material OH Cost / unit

$7.69

$9.61

$10.57

Labor cost / unit

$4.02

$8.05

$6.88

Machine Hours

3750

6250

800

10,800

Percentage of Total Hours

34.72%

57.87%

7.41%

Overhead Cost Allocated

$159,722.22

$266,203.70

$34,074.07

$460,000.00

OH Cost / unit

$21.30

$21.30

$8.52

Product Cost / unit

$49.00

$58.95

$47.97

Question 4:

QUESTION FOUR

Valves

Pumps

Flow Controllers

Total

Materials

$16.00

$20.00

$22.00

Direct Labor and Set Up

$4.02

$8.05

$6.88

Overhead Activity Totals:

Receiving

$600

$3,800

$15,600

$20,000

Materials Handling

$6,000

$38,000

$156,000

$200,000

Packing and Shipping

$2,400

$13,800

$43,800

$60,000

Engineering

$20,000

$30,000

...

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