In 1990, Bridgeton Industries produced three products at its Automotive Components and Manufacturing (ACF) plant: fuel tanks, manifolds, and doors. 

Use the information below to answer the following:

A. Complete the pro forma by-product income statement for 1990, given the existing cost system in the case.

B. For each product, calculate the budgeted selling price per unit, total absorption cost per unit, contribution margin (revenue minus variable costs) per unit, and profit per unit.

C. Assuming no other changes, evaluate the following statement about Bridgeton's cost system: " We should switch to machine hours as our cost driver for factory overhead to reduce RUCAG ."

D. Calculate the percentage of each Activity Driver in the Activity Analysis Table that each Cost Object consumes. Using the results, determine the number of indirect cost pools you think are needed for a multiple allocation basis system.

E. Calculate the reported unit cost for each product using a multiple allocation cost basis approach. Identify all the important components of your system (cost pools, cost objects, cost drivers, etc.) and explain the design options (eg, number of cost pools, cost drivers) you choose.

1990 pro forma income statement, by product

Bridgeton Industries Automotive Components and Manufacturing Plant

	Fuel tanks		Collectors		doors
Income		$83,535		$93,120		$49,887
Direct labour	4,599		6,540		2,963
Direct materials	16,996		35,725		16,825
Factory overhead*
cost of goods sold
Gross margin

*Allocated based on budgeted direct labor dollars.

Other 1990 information

	Fuel tanks	Collectors	doors
Units budgeted, produced and sold	5,427	7,532	10,420
Machine hours per unit	0,60	0,62	0.20

Available machine hours: 15,000

Activity analysis data

Activity	Conductor	Consumption by			Total cost of the activity
		Fuel tanks	Collectors	doors
run machines	machine hours				$21,153
Maintenance	maintenance hours	163.1	231.9	105.1	10,000
QA	Number of rejections	45	25	5	5,670
Setting	set hours	32.6	46.4	21.0	2,710
supply material	Income	72	98	130	3,040
pack and ship	shipments	55	75	100	1,565
plant safety	% of the incomes				7,130
Provide staff	Direct labor dollars				9,435
provide facilities	Square feet	20,000	10,000	50,000	18,680
Total overhead costs					$79,383

Answer rating: 100% (QA)

Bridgeton Industries ACF Plant Analysis A Pro Forma ByProduct Income Statement Item Fuel Tanks Manif... View the full answer