Hegy Chocolate is located in Montreal. The company prepares gift boxes of chocolates for private parties and
Question:
One of Hegy Chocolate’s largest customers is the Bailey and Choi law firm. This organization sends chocolates to its clients each Christmas and also provides them to employees at the firm’s gatherings. The law firm’s managing partner, Genevieve Bailey, placed the client gift order in September for 500 boxes of cream-filled dark chocolates. But Bailey and Choi did not place its December staff-party order until the last week of November. This order was for an additional 100 boxes of chocolates identical to the ones to be distributed to clients. Hegy Chocolate budgeted the cost per box for the original 500-box order as follows:
Chocolate, filling, wrappers, box .............................................................. $14.00
Employee time to fill and wrap the box (10 min.)..................................... 2.00
Manufacturing overhead........................................................................... 1.00
Total manufacturing cost.......................................................................... $17.00
Requirements
1. Do you agree with the cost analysis for the second order? Explain your answer.
2. Should the two orders be accounted for as one or two jobs in Hegy Chocolate’s system?
3. What sales price per box should Hegy set for the second order? What are the advantages and disadvantages of this price?
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Related Book For
Managerial Accounting
ISBN: 978-0176223311
1st Canadian Edition
Authors: Karen Wilken Braun, Wendy Tietz, Walter Harrison, Rhonda Pyp
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