1. Use the Overhead Cost Activity Analysis in Exhibit a few and other info on making costs to estimate merchandise cost pertaining to valves, sends, and movement controllers.
Show 1 reveals the believed product costs for defile ($37. 70), pumps ($48. 79), and flow control ($100. 76) using the data provided inside the Destin Instruments case study. Show 1: Predicted Product Costs for Valves, Pumps, and Flow Controllers
2 . Compare the approximated costs you calculate to existing normal unit price (Exhibit 3) and the revised unit cost (Exhibit 4). What causes the various product being methods to create such different results? Show 2 displays the unit costs for valves, pumps, and flow remotes using three or more different methods of calculation. All costing strategies give us different cost/unit for every product because each technique allocates overhead costs differently. Common costing allocates overhead like a percentage of direct labor, regardless of the percentage of expense used for every product. The revised technique, allocates expense at an compression rate depending on material related overhead. FONEM method pinpoints the cost of every activity and allocates overhead costs on a per item basis, with the usage of each resource. Regulators have the cheapest cost/unit employing all three methods. When it comes to pumps, the standard unit cost and revised unit cost equally show sends as having the highest cost/unit, followed by flow controllers. Yet , ABC reveals flow controllers with the maximum cost/unit accompanied by pumps. Display 2: Comparison of Costs
several. What are the strategic effects of your examination? What actions would you recommend to the managers at Destin Brass Products Co? Display 3 demonstrates that Destin Brass is losing money on circulation controllers, having a gross perimeter of -4%, on valves, it is in its target low margin of 35%, and with sends has a large gross perimeter 40%. This might explain how come the increase in prices in flow controllers has no effect...