alculate Product Costs, using JOB COSTING SYSTEM. Please SHOW CALCULATION. Dream Chocolate Company: Choosing a Costing System
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alculate Product Costs, using JOB COSTING SYSTEM. Please SHOW CALCULATION.
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Dream Chocolate Company: Choosing a Costing System TABLE 1 Typical Prices and Costs of Chocolate 641 1.25 oz. Bar 3.0 oz. Bar 3.25 oz. Bar Price Per Bar Non-Organic $1.40 $2.40 NA Organic $1.50 NA $2.55 Cost of Chocolate Non-Organic $0.18 $0.44 NA Organic $0.33 NA $0.83 Cost of Foil Cost of Label $0.03 $0.06 $0.06 $0.03 $0.08 $0.08 a Does not include additional flavors or "stir-in" ingredients. 7. Shipping Area The bars are invoiced, packed, and shipped out to the customer FOB shipping point. If deemed necessary, the bars are packed in insulated material with a cold pack to prevent melting. PRODUCT INFORMATION D.C. sells many types of bars, with varying sizes, ingredients, and flavors. Although there are other sizes available, D.C. typically sells bars in three standard sizes: 1.25 oz. (both organic and non-organic), 3.0 oz. (non-organic only), and 3.25 oz. (organic only). This section describes the ingredients, labor, and overhead required to make its bars. Materials Table 1 provides typical prices and costs of chocolate for the standard-sized bars. The bulk chocolate is generally from German suppliers, but D.C. also has a U.S. supplier of high-quality chocolate. Chocolate prices can vary, due largely to unstable conditions in major cocoa bean- producing nations such as the Ivory Coast. Standard chocolate bars, with no additional flavors or special ingredients, comprise about half (47 percent) of total sales. Besides chocolate and other ingredients, the product cost includes the foil and label. Table 1 provides the typical costs for these items. Bars can have one or more types of special flavors and ingredient additives, such as the recent order from the wellness company. The additional costs for these additives are handled in different ways. Flavor additives are a relatively small part of the overall weight of the bar, and primarily affect the taste of the chocolate itself. Bars with higher-cost flavor additives, such as coffee and Kava, comprise about 13 percent of sales. These ingredients are added to the pot and listed as an ingredient with a direct cost (e.g., $8 for two pounds of coffee used in a batch). Less expensive additives, such as flavoring oils (e.g., mint or lavender), are not included in direct costs as a little goes a long way. These costs usually show up in overhead. Sixteen ounces of oil cost about $22, and D.C. uses only two ounces for a batch of 1,200 1.25-oz. bars. About 16 percent of product sales have these flavoring oils. "Stir-in" ingredients are a relatively larger part of the weight of the bar, are clearly noticeable in the final bar, and affect the overall taste of the bar rather than the chocolate itself. Bars with stir-in ingredients, such as huckleberries and all nuts, comprise about 24 percent of sales and add additional direct materials and direct labor costs. Kay estimates $12 per pound average for nuts, Dream Chocolate Company: Choosing a Costing System TABLE 1 Typical Prices and Costs of Chocolate 641 1.25 oz. Bar 3.0 oz. Bar 3.25 oz. Bar Price Per Bar Non-Organic $1.40 $2.40 NA Organic $1.50 NA $2.55 Cost of Chocolate Non-Organic $0.18 $0.44 NA Organic $0.33 NA $0.83 Cost of Foil Cost of Label $0.03 $0.06 $0.06 $0.03 $0.08 $0.08 a Does not include additional flavors or "stir-in" ingredients. 7. Shipping Area The bars are invoiced, packed, and shipped out to the customer FOB shipping point. If deemed necessary, the bars are packed in insulated material with a cold pack to prevent melting. PRODUCT INFORMATION D.C. sells many types of bars, with varying sizes, ingredients, and flavors. Although there are other sizes available, D.C. typically sells bars in three standard sizes: 1.25 oz. (both organic and non-organic), 3.0 oz. (non-organic only), and 3.25 oz. (organic only). This section describes the ingredients, labor, and overhead required to make its bars. Materials Table 1 provides typical prices and costs of chocolate for the standard-sized bars. The bulk chocolate is generally from German suppliers, but D.C. also has a U.S. supplier of high-quality chocolate. Chocolate prices can vary, due largely to unstable conditions in major cocoa bean- producing nations such as the Ivory Coast. Standard chocolate bars, with no additional flavors or special ingredients, comprise about half (47 percent) of total sales. Besides chocolate and other ingredients, the product cost includes the foil and label. Table 1 provides the typical costs for these items. Bars can have one or more types of special flavors and ingredient additives, such as the recent order from the wellness company. The additional costs for these additives are handled in different ways. Flavor additives are a relatively small part of the overall weight of the bar, and primarily affect the taste of the chocolate itself. Bars with higher-cost flavor additives, such as coffee and Kava, comprise about 13 percent of sales. These ingredients are added to the pot and listed as an ingredient with a direct cost (e.g., $8 for two pounds of coffee used in a batch). Less expensive additives, such as flavoring oils (e.g., mint or lavender), are not included in direct costs as a little goes a long way. These costs usually show up in overhead. Sixteen ounces of oil cost about $22, and D.C. uses only two ounces for a batch of 1,200 1.25-oz. bars. About 16 percent of product sales have these flavoring oils. "Stir-in" ingredients are a relatively larger part of the weight of the bar, are clearly noticeable in the final bar, and affect the overall taste of the bar rather than the chocolate itself. Bars with stir-in ingredients, such as huckleberries and all nuts, comprise about 24 percent of sales and add additional direct materials and direct labor costs. Kay estimates $12 per pound average for nuts,
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Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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