Chewy Treats, Inc., makes several lines of caramel-based candies and treats. Each product runs on its own set of machines. The lines Chewy makes are Wrapped Caramels, Chocolate-Covered Caramels, Caramel Cookie Bars, and Caramel Nut Bars. Direct labor on the assembly lines is paid $15 per hour. Lift trucks cost $120,000 per year. The building that Chewy occupies costs $300,000 per year, and electricity is $120,000 per year. Back office costs are $400,000 per year. Details about Chewy ’s costs for the various product lines for the year are contained in the following table. 

REQUIRED:

a. Complete the grid above by transforming all of the percentages and hours into actual costs by cost pool. It will be easier if you enter the table into Excel.

b. Assign the overhead to the four main cost pools using machine labor hours as your driver.

c. Calculate the cost per unit made using the driver information given.

d. Chewy marks up its costs by 25% to provide profit. What would Chewy have to charge by unit of product made to generate its 25% profit per year?

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Chewy Treats, Inc. Chocolate-Covered Caramels General Business Resource Wrapped Caramels Caramel Cookie Bars Caramel Nut Bars Costs Direct labor hours 12,000 8,000 12,000 12,000 Machine hours 6,000 4,000 4,000 4,000 Direct materials $200,000.00 $250,000.00 $400,000.00 $500,000.00 Machine costs $120,000.00 $160,000.00 $200,000.00 $200,000.00 Machine maintenance $30,000.00 $30,000.00 $40,000.00 $50,000.00 Supplies $75,000.00 $60,000.00 $120,000.00 $100,000.00 20% 15% Lift trucks 20% 30% 30% $120,000.00 Building 30% 40% 15% $300,000.00 Electricity 25% 25% 25% 25% $120,000.00 Back office costs on MH ?? ?? ?? ?? $400,000.00 Driver Pieces Mode Pieces Made Bars Made Bars Made Machine Hours Driver Frequency 20,000,000 16,000,000 5,000,000 4,000,000 18,000