Unit$-$ and Batch$-$Level Cost Drivers

Kentucky Fried Chicken $($a reportable operating segment of Yum Brands Inc.$),$ a fast$-$food restaurant, serves fried chicken. The managers are considering an $$all you can eat$$ promotion and want to know the costs before setting a price. Each batch must be $50$ pieces. The chicken is precut by the chain headquarters and sent to the stores in $10-$piece bags. Each bag costs $$5.$ Preparing a batch of $50$ pieces of chicken with KFC$$s special coating takes one employee two hours. The current wage rate is $$10$ per hour. Another cost driver is the cost of putting fresh oil into the fryers. New oil, costing $$9,$ is used for each batch.

Round answers to two decimal places,$$when applicable.

$($a$)$ Determine the cost of preparing one batch of $50$ pieces.

$Answer $1$

$($b$)$ If management projects that it will sell $150$ pieces of fried chicken, determine the total cost and the cost per piece.

$$Total cost $Answer $2$

$$Unit cost $Answer $3$

$($c$)$ If management estimates the sales to be $350$ pieces, determine the total costs.

$Answer $4$

$($d$)$ How much will the batch costs increase if the government raises the minimum wage to $$12$ per hour?

$Answer $5$

$($e$)$ If management decided to increase the number of pieces in a batch to $100,$ determine the cost of preparing $350$ pieces. Assume that the batch would take twice as long to prepare, pay rate stays at $$10$ per hour, and management wants to replace the oil after $100$ pieces are cooked. Assume no change in expected sales volume. Note that only full batches can be prepared.

$Answer $6$total cost