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Bronson Case Study Analysis Solution

Autor:   •  November 10, 2016  •  Case Study  •  448 Words (2 Pages)  •  466 Views

Page 1 of 2

Part 1)

To calculate the total cost per package, we need to determine the cost allocation rate as below:

Cost Allocation Rate/Predetermined Overhead Rate = Estimated Total Indirect Costs/Estimated Total Direct Labor Hours = 40,125/(10,000*.01 + 50,000*.05) = $15.4327 per labor hour

The total budgeted cost per package is calculated as follows:

Bronson Shrimp Farms

Total Budgeted Cost Per Unit (Original Costing System)



Headless Shrimp

Peeled and Deveined Shrimp

Direct Materials:

Shrimp

3.5

4.5

Foam Trays

0.05

0.05

Shrink Wrap

0.05

0.02

Direct Labor

0.2 (.01*20)

1 (.05*20)

Indirect Costs

0.15 (.01*15.4327)

0.77 (.05*15.4327)

Total Cost Per Package

$3.95

$6.34

_______

Part B)

To calculate the total cost per package under activity based costing, we need to calculate the activity rates as follows:

Activity

Budgeted Total Costs (A)

Budgeted Total Activity (B)

Activity Rate (A/B)

Redesign of Production Process

5,000

5 (4+1)

1,000

per design change

Production Scheduling

6,000

60 (40 + 20)

100

per batch

Chilling

1,500

75,000 (10,000*2.5 + 50,000*1)

0.02

per pound

Processing

19,200

160,000 (10,000*1 + 50,000*3)

0.12

per cut

Packaging

1,425

47,500 (10,000*1 + 50,000*.75)

0.03

per cubic foot

Order Filling

7,000

200 (90 + 110)

35

per order

The total budgeted cost is calculated with the use of following table:

...

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