Consider the following ABC Full Costing Report by the Sacks Toy Company, which manufactures
specialty dolls:
Management is considering adding a third product line, the Riana doll. Assume the company obtains sufficient additional capacity to offer this product line that has the following characteristics:
? Uses 50% more materials than the Alissa doll
? Is made on a new, dedicated molding machine
? A week's production would be 12,000 dolls in three batches
? Customers would place two orders per week and there would be no warehousing
? Sales and forecasting costs would be the same as other products
? A team of five employees would produce the product
Required:
a) Estimate the unit-level and full ABC cost of this product.
b) What additional information would you like to have before deciding whether to recommend this product?

Question

Consider the following ABC Full Costing Report by the Sacks Toy Company, which manufactures
  specialty dolls:
Management is considering adding a third product line, the Riana doll. Assume the company obtains sufficient additional capacity to offer this product line that has the following characteristics:
? Uses 50% more materials than the Alissa doll
? Is made on a new, dedicated molding machine
? A week's production would be 12,000 dolls in three batches
? Customers would place two orders per week and there would be no warehousing
? Sales and forecasting costs would be the same as other products
? A team of five employees would produce the product
Required:
a) Estimate the unit-level and full ABC cost of this product.
b) What additional information would you like to have before deciding whether to recommend this product?

Quizplus · Accepted Answer

The Answer of Consider the following ABC Full Costing Report by the Sacks Toy Company, which manufactures
  specialty dolls:
Management is considering adding a third product line, the Riana doll. Assume the company obtains sufficient additional capacity to offer this product line that has the following characteristics:
? Uses 50% more materials than the Alissa doll
? Is made on a new, dedicated molding machine
? A week's production would be 12,000 dolls in three batches
? Customers would place two orders per week and there would be no warehousing
? Sales and forecasting costs would be the same as other products
? A team of five employees would produce the product
Required:
a) Estimate the unit-level and full ABC cost of this product.
b) What additional information would you like to have before deciding whether to recommend this product?

Consider the Following ABC Full Costing Report by the Sacks