ACTIVITY BASED COSTING and SEGMENT PROFITABILITY ANALYSIS_Happy Chips Inc 2023 Business & Finance
2023 Prepare an ACTIVITY BASED COSTING ANALYSIS and SEGMENT PROFITABILITY ANALYSIS based on the following case study information
Prepare an ACTIVITY BASED COSTING ANALYSIS and SEGMENT PROFITABILITY ANALYSIS based on the following case study information for Happy Chips Inc:
Happy Chips Inc. currently manufactures and distributes several varieties of potato chips to different types of retail accounts:
1. Grocery segment – with 250 retail customer locations accounting for 2.1 million annual unit sales and 74% of annual revenue.
2. Drug segment- with 140 customer locations accounting for 365K annual unit sales and 14% of annual revenue.
3. Mass merchandise segment- with 6 locations that account for 400K annual unit sales and 12% of annual revenue.
Please note that all deliveries were store-direct with 2 deliveries per week to grocery stores, 1 delivery per week to drugstores , and 3 deliveries per week to mass merchandisers.
The selling prices for each unit were :
1. Grocery $1.70
2. Drugstores $1.90
3. Mass Merchandise $1.40
Mass merchandise segment wants Happy Chips to cover the suggested retail price (generally about $3.00 regardless of channel) with a sticker bearing its reduced price. The machinery to apply these labels had an annual lease cost of $40,000. Labor and material will cost $0.06 per unit.
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