Destin Brass Products Co. Case Analysis Required
Questions Solution
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Purchase
and read the case study titled Destin Brass Products Co. by William J. Bruns
Jr. It
should
cost you $3.95. There is also a supplemental spreadsheet that you should
download to
work
from. Disregard the questions at the end of the case. You should answer the
following
questions:
Requirement #1 – Using
Activity Based Costing to determine the cost per product.
a.)
Use Exhibit #4 to calculate the activity rates per each activity for the
material related
overhead
and the other overhead amounts.
b.)
Use the rates you calculated in part a to calculate the total overhead applied
to each
product.
(You should use the activities in Exhibit 5. Where
activity numbers have
been provided use the actual activity amounts not their
percentages as the case
writers have rounded their percentages. For example use the number
of transactions
4 + 25 + 100 = 129 transactions not 3% + 19% + 78%)
c.)
Don’t forget to use the Material, Set up labor, and Direct labor, costs
provided for
each
product in Exhibit 4.
Requirement #2 – Compare
the cost you got for Requirement #1 to the standard cost in Exhibit
#3
and the Revised Unit Cost in Exhibit #4. What is causing the different costs
per product
between
the three different costing methods?
a.)
Put all three costs on one spreadsheet so you can see the differences.
Requirement #3 – Compute
the Profit Margin for each product using all three costing methods.
Use
the actual price from Exhibit #1. Based on your analysis, what actions would
you suggest
the
managers at Destin do?
a.)
Consider which costing methods they should choose and why.
b.)
Considering your margins what should they do considering the outside pricing
pressure?
c.)
Based on your analysis, what actions would you suggest the managers at Destin
do
regarding
the flow controller product? Be specific as to what they should do to
control costs. In other words don’t just say raise
their price.
Rules:
1.) This is an individual
assignment. You may not discuss the assignment with any other classmates .
Failure to complete this
assignment on your own is an academic integrity violation and will be
treated with zero tolerance as
stated in the course syllabus.
2.) Answers to questions must be
typed, not hand written. Answers to the questions must be in a
separate Word document. Make sure
you explore all aspects of your decision. If you are assuming
something, you must tell me. If
you do assume something, explain what would happen if you
assumed something else, or if the
opposite were true. In other words, fully analyze the data and
answer the questions.
3.) You must use Excel to prepare
your spreadsheets I will be printing these out to grade them so
please:
a. Pay attention to formatting,
margins, etc. In other words:
i. Your work for 1 problem should
not extend onto multiple pages.
ii. You should not have 1 problem
extend past 1 page of work. Unless there is a
logical cut off. I should still
be able to read it if it is printed to just 1 page.
iii. You should adjust the size
of your cells so words are not cut off.
iv. Your text and numbers should
be in the same format. (font, size, dollar signs,
decimal places, etc.)
v. It should look professional
and be organized in a logical manner.
vi. The answer to each question
should be in its own separate tab. This makes cell
adjustment much easier.
b. All spreadsheets should
contain linked cells. In other words except for input numbers ALL
calculations should be done with
formulas.
c. Failure to properly format
your spreadsheet will result in a 15 point penalty.
d. Failure to link your cells
will result in a 15 point penalty.
4.) Organization is key! As
accounting students, your work must be well organized. Accountants are
responsible for reporting
information to the rest of the company. If our work is sloppy or
disorganized, no one will trust
our report and then we may as well just go get coffee and donuts for
everybody else at the meeting and
go home.
5.) Your report should consist
of:
a. A title page with your name on
it.
b. The Excel spreadsheet with all
calculations.
c. A word document answering the
questions above.
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