Process Activity Analysis The Quench Beverage Company bottles soft drinks into a
ID: 2484371 • Letter: P
Question
Process Activity Analysis
The Quench Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities:
Mixing: water, sugar, and beverage concentrate are mixed.
Filling: mixed beverage is filled into 12-oz. cans.
Packaging: properly filled cans are boxed into cardboard "fridge packs."
The activity costs associated with these activities for the period are as follows:
The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ozs. of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or "kicked," from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans.
This process begins by mixing and filling 6,240,000 cans during the period, of which only 6,000,000 cans are actually packaged. The difference of 240,000 cans are rejected due to underweight kicks.
A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 240,000 cans to 60,000 cans.
a. Determine the total activity cost per packaged can under present operations. Round to the nearest cent.
$ per can
b. Determine the amount of increased packaging activity costs from the expected improvements.
$
c. Determine the expected total activity cost per packaged can after improvements. Round to three decimal places.
$ per can
Process Activity Analysis
The Quench Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities:
Mixing: water, sugar, and beverage concentrate are mixed.
Filling: mixed beverage is filled into 12-oz. cans.
Packaging: properly filled cans are boxed into cardboard "fridge packs."
The activity costs associated with these activities for the period are as follows:
Mixing $130,000 Filling 116,000 Packaging 114,000 Total 360,000The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ozs. of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or "kicked," from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans.
This process begins by mixing and filling 6,240,000 cans during the period, of which only 6,000,000 cans are actually packaged. The difference of 240,000 cans are rejected due to underweight kicks.
A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 240,000 cans to 60,000 cans.
a. Determine the total activity cost per packaged can under present operations. Round to the nearest cent.
$ per can
b. Determine the amount of increased packaging activity costs from the expected improvements.
$
c. Determine the expected total activity cost per packaged can after improvements. Round to three decimal places.
$ per can
Explanation / Answer
Details Amt $/Qty No of Good cans packaged 6,000,000 Total Activity costs 360,000 a Actvity cost per can = $ 0.0600 b Packaging activity cost for 6000,000 cans = 114,000 Packaging cost per can = $ 0.0190 No of can packaging increased after improvement=240000-60000= 180,000 Increase in Packaging cost after process improvement=180000*0.0190= $ 3,420.00 c Total Activity cost after Process Improvement Details Mixing activity 130,000 Filling activity 116,000 Packaging activity 117,420 Total Cost of Activity 363,420 No of Goods Cans output= 6,180,000 Total Activity cost per can $ 0.0588
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