Destin Brass

This case deals with product costs and the numbers managers can use for creating a product cost.  The case asks you to consider several different ways of computing the costs of the products made at Destin Brass.  As you work through the various numbers keep asking yourself which approach will provide the product costs that will do the most to create value for the company.  Keep in mind the costs of operating the costing system as well as the value you will get from the numbers you compute.

The spreadsheet you have already has columns set up for each product, and I suggest you try to keep this approach to working with the numbers in the case.  That is, collect all the appropriate numbers for each product in the column for that product and then do the calculations for the product cost.

For example, for the activity based costing approach put all the costs assigned to each product in the column for that product and then divide all these costs by the units you will produce.  This will quickly give you a unit cost for all the overhead costs assigned by the ABC method.  If you take the overhead costs and spread them one at a time to the products, you will waste very little time doing this problem.

Think about this issue:  How reliable are the data on machine hours, material moves, and engineering time?