September 2023 Performance Drinks LLC is owned by Dave N Port Performance Drinks produces a variety
2024 Managerial Accounting Case Study Assignment Help
Performance Drinks LLC is owned by Dave N Port Performance Drinks produces a variety 2023
Performance Drinks, LLC is owned by Dave N. Port. Performance Drinks produces a variety of sports centered drinks. They began operations in 1993 shortly after Mr. Port graduated with his M.B.A. That report is following: PERFORMANCE DRINKS – MONTHLY PROFIT REPORT Basic Hydration Intensity Post Workout Total REVENUE Sales $125,000 $120,000 $74,250 $93,000 $412,250 COSTS Direct Materials $40,000 $50,000 $31,000 $33,000 $154,000 Direct Labor $25,000 $20,000 $10,000 $18,000 $73,000 Fringe Benefits on Direct Labor $11,250.00 $9,000.00 $4,500.00 $8,100.00 $32,850.00 Manufacturing Overhead $43,750.00 $35,000.00 $17,500.00 $31,500.00 $127,750.00 TOTAL COST $120,000.00 $114,000.00 $63,000.00 $90,600.00 $387,600.00 GROSS MARGIN $5,000.00 $6,000.00 $11,250.00 $2,400.00 $24,650.00 GROSS MARGIN RATIO 4.00% 5.00% 15.15% 2.58% 5.98% Annual Volume: 100,000 80,000 45,000 60,000 285,000 Unit Price: $1.25 $1.50 $1.65 $1.55 $1.45 Unit Cost: $1.200 $1.425 $1.400 $1.510 $1.360 Since your primary area of focus is on the indirect costs you compile the following report which further details your overhead charges: PERFORMANCE DRINKS – MONTHLY MFG OHD COST REPORT Monthly Charge Indirect Labor $55,000.00 Fringe Benefits on Indirect Labor $24,750.00 Utilities $5,000.00 Processing Equipment – Depreciation $10,000.00 Preventative Maintenance $10,000.00 Information Technology $23,000.00 Total $127,750.00 Overhead Activities: Using traditional costing methods, which support your absorption costing system, you base overhead allocation on direct labor cost. Furthermore, “fringe benefits” are a function of direct labor cost. As a result of your many meetings to discuss company overhead you determine that the majority of your indirect costs are related to four primary activities. Those activities are equipment set-ups, production runs, production management and machine-hour capacity. “Production Management” refers to a number of items that are correlated to the number of products the company produces. Ultimately you determine that your key activities have the following usage patterns, as they pertain to the monthly overhead costs: Monthly Equipment production number Machine charge set ups rungs of products hour capacity Indirect labor 55,000 20% 45% 15% 20% Fringe Benefits on indirect labor 24750 20% 45% 15% 20% Utilities 5,000 5% 65% 0% 30% Processing Equipment- Depreciation 10,000 0% 100% 0% 0% Preventative Maintenance 10,000 40% 30% 0% 30% Information technology 23,000 10% 15% 70% 5% Upon reviewing budget data from the last budget cycle you discover that the monthly number of set-ups was estimated to be 85. The number of production runs was estimated to be 250. That monthly machine-hour capacity is presently at 20,000 machine-hours. Lastly, Performance Drinks produces a total of four products. After talking with the Plant Manger you create the following usage data relative to products and activities: Activity Basic Hydration Intensity Post workout set ups 15 15 50 5 Production runs 125 65 35 25 production Mgt 1 1 1 1 MACHINE HOUR CAPACITY 9000 4000 3000 4000 Requirements: 1. 1. Based on all of the date provided, compute the cost driver rates for each of the four activities. 2. 2. Compute the per unit product costs for each of the four products. Compute this cost using ABC allocation for overhead. Show the computation for each per unit product cost in detail.