Refer to Problem 16-8. After eating at the pizzeria for a week, the 40 agents realize they
Question:
Required:
1. Calculate the average lunch cost for each member in each of the two groups, A and B. Compare this with the activity-based-costing assignments. Discuss the merits of grouping based on similarity. Discuss the analogy to multiple-product value streams.
2. Suppose that members of the heavy-eating group (Group B) decided that they were eating more than necessary for their health and well-being and decided to reduce their total calories. They therefore agreed to reduce consumption of pizza by one slice and consumption of root beer by one glass for each member of the group.
Relative to the original order, how much extra capacity exists? If the excess capacity is eliminated by reducing the order, what is the new average cost for Group B?
Suppose that the decision is to use the extra capacity to invite three guests (one of Type B1 and two of Type B2, at the reduced consumption level) to lunch (at the cost of the agents). If the original order is used as the benchmark cost, what is the extra cost of the guest program? Comment on the conceptual significance of this for manufacturing firms.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
Question Posted: