Destin Brass Products

Destin Brass Products Co. Case

1.
Cost:

Material $22
Set-up Labor $0.48
Direct Labor $6.4
Machine Depreciation (0.2 hours per unit *$25 per hour of use) $5
Receiving and Material Handing (78% * $220000/4000) $42.9
Engineering (50%*$100000/4000) $12.5
Packing and Shipping (73%*$60000/4000) $10.95
Maintenance (7%*$30000/4000) $0.525
Total Cost per Flow Controller $100.755

2 Cost | Traditional | Revised | ABC | Set-up | 16.45% | 71.43% | 71.43% | Machine Depreciation | 16.45% | 7.4% | 7.4% | Receiving & Handling | 16.45% | 19.2% | 78% | Engineering | 16.45% | 7.4% | 50% | Packing & Shipping | 16.45% | 7.4% | 73% | Maintenance | 16.45% | 7.4% | 7% |

0.4*4000*16/9725*16 = 16.45%
12*10/168 = 71.43%
0.2 * 4000/10800 = 7.4%

3.
Under the traditional cost accounting system, the company allocated the total overhead cost assigned to production on the basis of production-run labor cost. The unit labor cost of flow controllers is $6.4. The unit overhead cost allocated to it is only $28.10. When using the revised cost accounting system, the company allocated the overhead cost based on machine hours. The machine hour of flow controllers is the lowest among the three products. So whether the company uses