Destin Brass Products Co. Case Analysis Required Questions Solution

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...