Destin Brass Products

Destin Brass Products Co. Case 1. equal Material $22 Set-up bear on $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) $42. Engineering (50%*$hundred thousand/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 alphabet 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. beneath the traditional follow business relationship system, the company allocated the total bash cost assigned to intersection on the basis of production-run drudge cost. The unit labor cost of flow controllers is $6. 4. The unit overhead cost allocated to it is only $28 . 10. When use the revised cost accounting system, the company allocated the overhead cost ground on machine hours.The machine hour of flow controllers is the lowest among the common chord products. So whether the company uses direct labor dollars or machine hours, the overhead be allocated to flow controllers are relatively low since they consume little of this cost basis. When use ABC system, the company allocates the overhead cost on the basis of transactions. Among all the products, the company spends 78% of its receiving and materials handling, 73% of packing and transit and 50% of engineering efforts on flow controllers.Since flow controller production use most of the transactions, the costs assigned to flow controllers are higher(prenominal) under ABC than they are under the traditional cost accounting system. 4. After using the ABC costing system, more overhead costs are allocated to flow controllers and less to valves and pump. Since other factors are stay the same, t he cyberspace income for valves and pumps will increase and the net income for flow controllers will decrease. Income does not change.