Annie's Homemade makes the brownies it adds to vanilla fudge brownie ice cream. The company is deciding whether it should sell brownies as a stand-alone product or always cut them into smaller pieces and add them to the vanilla fudge brownie ice cream. The cost to make 12 three-ounce brownies is $4.00. Each three-ounce brownie could be sold for $2.00. It costs $0.20 to cut a three-ounce brownie into pieces and add it to ice cream. A six-ounce serving of vanilla fudge brownie uses one ounce of brownies plus $1.10 of other ingredients and labor while selling for $5.00. Required: 1. What total revenue does Annie's earn when it adds a three-ounce brownie to servings of vanilla fudge brownie ice cream? Total revenue after further processing 2. What is the sales value of a three-ounce brownie at the split-off point? Sales value at the split-off point 3. What is the incremental revenue from further processing a three-ounce brownie? Incremental revenue from further processing 4. What is Annie's total cost of further processing if it chooses to include each three-ounce brownie in servings of vanilla fudge brownie ice cream? Total cost of further processing 5. What is the financial advantage (disadvantage) of further processing a three-ounce brownie into servings of vanilla fudge brownie ice cream? Financial advantage (disadvantage)
Annie's Homemade makes the brownies it adds to vanilla fudge brownie ice cream. The company is deciding whether it should sell brownies as a stand-alone product or always cut them into smaller pieces and add them to the vanilla fudge brownie ice cream. The cost to make 12 three-ounce brownies is $4.00. Each three-ounce brownie could be sold for $2.00. It costs $0.20 to cut a three-ounce brownie into pieces and add it to ice cream. A six-ounce serving of vanilla fudge brownie uses one ounce of brownies plus $1.10 of other ingredients and labor while selling for $5.00. Required: 1. What total revenue does Annie's earn when it adds a three-ounce brownie to servings of vanilla fudge brownie ice cream? Total revenue after further processing 2. What is the sales value of a three-ounce brownie at the split-off point? Sales value at the split-off point 3. What is the incremental revenue from further processing a three-ounce brownie? Incremental revenue from further processing 4. What is Annie's total cost of further processing if it chooses to include each three-ounce brownie in servings of vanilla fudge brownie ice cream? Total cost of further processing 5. What is the financial advantage (disadvantage) of further processing a three-ounce brownie into servings of vanilla fudge brownie ice cream? Financial advantage (disadvantage)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:AH 13-6 Sell or Process Further Decisions LO 13-/
Annie's Homemade makes the brownies it adds to vanilla fudge brownie ice cream. The company is deciding whether it should sell
brownies as a stand-alone product or always cut them into smaller pieces and add them to the vanilla fudge brownie ice cream. The
cost to make 12 three-ounce brownies is $4.00. Each three-ounce brownie could be sold for $2.00. It costs $0.20 to cut a three-ounce
brownie into pieces and add it to ice cream. A six-ounce serving of vanilla fudge brownie uses one ounce of brownies plus $1.10 of
other ingredients and labor while selling for $5.00.
Required:
1. What total revenue does Annie's earn when it adds a three-ounce brownie to servings of vanilla fudge brownie ice cream?
Total revenue after further processing
2. What is the sales value of a three-ounce brownie at the split-off point?
Sales value at the split-off point
3. What is the incremental revenue from further processing a three-ounce brownie?
Incremental revenue from further processing
4. What is Annie's total cost of further processing if it chooses to include each three-ounce brownie in servings of vanilla fudge
brownie ice cream?
Total cost of further processing
5. What is the financial advantage (disadvantage) of further processing a three-ounce brownie into servings of vanilla fudge brownie
ice cream?
Financial advantage (disadvantage)
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