Many products are custom- designed with recent orders for function generators, harmonic analyzers, logic analyzers, temperature measurement instruments, and data-logging instruments. The company prices its instruments at 30 percent over estimated cost (excluding administrative and selling costs). Recently, senior management has noted that its product mix has changed. Specifically, the company is receiving fewer large orders for instruments that are relatively simple to produce, and customers are saying that the company is not price competitive.
a. Based on the consultants’ work to date, calculate the
ABC cost per unit of each product.
b. The consultants have completed their job, and
Quantum TM has adopted an ABC system as indicated in Exhibit 1. Recently, the company received an order for a unique data-logging device. The device will require $9,000 of components and $3,000 of direct labor along with the following requirements: