The Brite Beverage Company bottles soft drinks into aluminum cans. The manufactu

Question

The Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities: 1. Mixinga water, sugar, and beverage concentrate are mixed 2. Filling: mixed beverage is filled into 12-oz. cans. fridge 3. Packaging: properly filled cans are boxed into cardboard "fridge packs. The activity costs associated with these activities for the period are as follows: Mixing Filling Packaging $162,000 114,000 Tetal 20,000 The activity costs do not indlude materials costs, which are ignored for this analysis. Each can is expected to contain 12 ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or "kicked," from the filing ine 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. o cans,thus process the number of filled cans to 6,180,000 (6,000,000(240,000 60,000)] . Determine the total activity cost per packaged can under present operations. Round to the neareat cent. per can b. Determine the amount of increased packaging activity costs from the expected improvements. . Determine the expected total activity cost per packaged can after improvements. Round to three decimal places. per can

Explanation / Answer

a. 420,000/6,000,000 = $0.07 per can.

b. Cost per can packaging is $0.019 ($114000/6,000,000 per can)

So the increment cost of packing will be $3420 (i.e. 180000*0.019)

c. Total activity cost per can is

= ($420,000+$3420)/6180000 can

= $0.0685

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