Brewery Company Operates Many Bottling Plants Around the Globe

Essay

Brewery Company operates many bottling plants around the globe. At its Montreal plant, where six different brands are bottled, the following costs were incurred in 2012 to produce 10,000,000 bottles of beer:
1. Development costs of adding the new product "Light Beer Plus"
amounted to $307,000.
2. Material handling costs of inspecting and handling concentrate, bottles, packages, and so forth amounted to $216,750.These costs are allocated to each production run.
3. Incoming materials purchase costs that can be directly traced to individual products being bottled and packaged. These costs are purely variable with output level and amounted to $1,106,500.
4. Executive salaries and other central administration overhead amounted to $396,000.
5. Plant overhead including costs related to: supervision, safety, energy and plant insurance amounted to $311,500.
6. The cost of cleaning and calibrating equipment for each production run amounted to $85,750.
Required:
a. Classify each of the preceding costs as output unit-level, batch-level, product-sustaining, or facility-sustaining.
b. Compute the cost per unit for the total manufacturing cost.