Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 24,200 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 12,100 gallons and annual orders for Marcee's total 6,050 gallons. Variable manufacturing costs are $0.80 per gallon, and annual fixed manufacturing costs are $32,100. The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck's orders 6,050 gallons in the summer and 6,050 gallons in the winter. Marcee's is closed in the winter and orders all 6,050 gallons in the summer. Required: a. Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred. b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred. (Round your intermediate calculations and final answers to 2 decimal places.) Winter Summer Product Cost per gallon per gallon
Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 24,200 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 12,100 gallons and annual orders for Marcee's total 6,050 gallons. Variable manufacturing costs are $0.80 per gallon, and annual fixed manufacturing costs are $32,100. The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck's orders 6,050 gallons in the summer and 6,050 gallons in the winter. Marcee's is closed in the winter and orders all 6,050 gallons in the summer. Required: a. Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred. b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred. (Round your intermediate calculations and final answers to 2 decimal places.) Winter Summer Product Cost per gallon per gallon
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the
capacity to make 24,200 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 12,100 gallons and annual orders for Marcee's total 6,050 gallons.
Variable manufacturing costs are $0.80 per gallon, and annual fixed manufacturing costs are $32,100.
The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck's orders 6,050 gallons in
the summer and 6,050 gallons in the winter. Marcee's is closed in the winter and orders all 6,050 gallons in the summer.
Required:
a. Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred.
b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it.
Complete this question by entering your answers in the tabs below.
Required A Required B.
Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred. (Round your
intermediate calculations and final answers to 2 decimal places.)
Winter
Summer
Product Cost
per gallon
per gallon
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