Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these products follow. PowerPunchSlimLife Production volume.12,500 bottles180,000 bottles Liquid materials.1,400 gallons37,000 gallons Dry materials.620 pounds12,000 pounds Bottles12,500 bottles180,000 bottles Labels3 labels per bottle1 label per bottle Machine setups..500 setups300 setups Machine hours200 MH3,750 MH Additional data from its two production departments follow: DepartmentDriver Cost Mixing department Liquid materialsGallons $2,304 Dry materialsPounds 6,941 Utilities.Machine hours 1,422 Bottling department Bottles..Units$77,000 Labeling...Labels per bottle 6,525 Machine setup..Setups 20,000
1. Determine the cost of each product line using ABC.
2. What is the cost per bottle for PowerPunch? What is the cost per bottling of SlimLife? (Hint: Your answer should draw on the total cost for each product line computed in requirement 1.)
3. If PowerPunch sells for $3.75 per bottle, how much profit does the company earn per bottle of PowerPunch that it sells?
4. What is the minimum price that the company should set per bottle of SlimLife? Explain.