Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The
Question:
Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 25,000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 12,500 gallons and annual orders for Marcee's total 6,250 gallons. Variable manufacturing costs are $.80 per gallon, and annual fixed manufacturing costs are $33,800.
The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck orders 6,250 gallons in the summer and 6,250 gallons in the winter. Marcee's is closed in the winter and orders all 6,250 gallons in the summer. |
Required: | |
(a) | Calculate the product cost for each season with excess capacity costs assigned to the season in which it is incurred. (Round your intermediate calculations and final answers to 2 decimal places.) Product Cost Winter = $3.50 per gallon Summer = $2.15 per gallon (b) Calculate the product cost for each season with excess capacity costs assigned to the season requiring it. (Round your intermediate calculations and final answers to 2 decimal places.) Product Cost Winter = $2.15 per gallon Summer = $_______per gallon ??????? |
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher