1. Ralston Dairy gathered this data about the two products that it produces: Products Current Sales Value...
Question:
1. Ralston Dairy gathered this data about the two products that it produces:
| Products | Current Sales Value | Estimated Added Processing Costs | Sales Value If Processing Further | ||||||
| Frozen yogurt | $7,800 | $2,200 | $11,100 | ||||||
| Ice cream | 12,000 | 7,000 | 17,900 | ||||||
Which of the products should be processed further? (Frozen yogurt, Ice cream) because profits increase by, decrease by $___
2. Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was:
| Revenues | $750,000 |
| Direct materials | 324,000 |
| Direct labor | 60,000 |
| Manufacturing overhead (fixed) | 132,000 |
| Manufacturing overhead (variable) | 84,000 |
At the start of the current year, Marcotti received a special order for 15,000 cupcakes to be sold for $1.10 per cupcake. To complete the order, the company must incur an additional $800 in total fixed costs to lease a special machine that will stamp the cupcakes with the customer’s logo. This order will not affect any of Marcotti’s other operations and it has excess capacity to fulfill the contract. Should the company accept the special order?
