The overarching goal is to calculate the profitability of Kinkaid’s finished goods products using ABC charging rates for upstream departments, manufacturing support departments, and ABC-based SG&A costs.

The learning objectives are to develop a total cost per unit, including SG&A, on an ABC basis, analyze manufacturing and SG&A costs, by product, using ABC methodologies, understand how indirect manufacturing costs and SG&A costs are assigned to finished goods, analyze and assess the relative performance of the different product lines using a fully loaded cost estimate, and apply basic Excel commands to efficiently analyze a complex problem.

The data worksheets used in the analysis are Product Cost Summaries-20x6, ABC Driver Info- Mfg-20x6, Indirect Mfg Cost Centers, DB 7.2 ABC Ind Mfg Cost Template, DB 7.2 ABC Mfg CC 20x6 Template, DB 7.2 Part Calcs-ABC Template, DB 7.2 Upstream $ to FG Templt, DB 7.2 FG Costs ABC Template, DB 7.2 SG&A ABC $ Rate Template, and DB 7.2 SG&A ABC Cost Template.
Do the following:

DB 7.2 ABC Ind Mfg Cost Template: Calculate the ABC-based charging rate for manufacturing support departments and calculate the overhead to be charged to each of the direct manufacturing departments;

DB 7.2 ABC Mfg CC 20x6 Template: Assign the ABC-based manufacturing support department costs to direct manufacturing departments;

DB 7.2 Part Calcs-ABC Template: Enter the total conversion costs for the upstream manufacturing departments, calculate the cost per part for the upstream manufacturing departments using the ABC rates, enter the total conversion costs for the finished goods manufacturing departments, and calculate the cost per part for the finished goods manufacturing departments using the ABC rates

DB 7.2 Upstream $ to FG Templt: Enter the cost per part for upstream departments using the ABC charging rates, and calculate the total upstream costs charged to each finished goods product line

DB 7.2 FG Costs ABC Template: Enter the materials and labor cost per finished goods unit, enter the overhead cost, per finished goods unit made using ABC rates, calculate total materials, labor, and directly charged overhead by finished goods unit, enter the upstream department costs, summarize total manufacturing costs by product line, and calculate the total cost per finished goods unit made

DB 7.2 SG&A ABC $ Rate Template: Summarize total ABC driver frequency by SG&A department, and calculate the ABC-based charging rate for the SG&A departments

DB 7.2 SG&A ABC Cost Template: Calculate SG&A expense, by product line, using ABC charging rates, summarize the total SG&A costs, by department, charged out to the product lines, and summarize the total SG&A costs per product line

DB 7.2 Product Profit Template: Enter total revenue by product line, enter the total cost of goods sold by product line, calculate the gross margin by product line, enter the SG&A costs by product line, calculate the operating profit by product line, summarize Kinkaid’s total operating profit for 20x6, and summarize each row

REQUIRED:

Complete the eight template worksheets and turn in the final worksheet, DB 7.2 Product Profit Template, along with the answers to the following questions: Which method of calculating overhead is best? Why? Are there any products offered by Kinkaid that are in need of either cost reduction or price adjustments? Which should Kinkaid do? Why?