Problem 04-4A Evaluating product line costs and prices using ABC LO P3 [The following information applies to the questions displayed below.]

Bright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.

Hi-Voltage EasySlim

Production volume 12,500 bottles 180,000 bottles

Liquid materials 1,400 gallons 37,000 gallons

Dry materials 620 pounds 12,000 pounds

Bottles 12,500 bottles 180,000 bottles

Labels 3 labels per bottle 1 label per bottle

Machine setups 500 setups 300 setups

Machine hours 200 MH 3,750 MH

Additional data from its two production departments follow.

Department Driver Cost

Mixing department

Liquid materials Gallons $ 2,304

Dry materials Pounds 6,941

Utilities Machine hours 1,422

Bottling department

Bottles Units $ 77,000

Labeling Labels per bottle 6,525

Machine setup Setups 20,000

Required 1 &2. Determine the cost of each product line using ABC. What is the cost per bottle for Hi-Voltage and EasySlim? (Do not round your intermediate calculations. Round "Activity Rate" answers to 2 decimal places.)

3. Assume if Hi-Voltage sells for $3.75 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? (Do not round intermediate calculations and round your answers to 2 decimal places.)

Hi-Voltage

Price per unit

Cost per unit

Profit (loss) per unit

4. What is the minimum price that the company should set per bottle of EasySlim?

$0.36 per bottle

$0.86 per bottle

$0.53 per bottle