Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice cream bars is shown below. Materials cost ($29 per unit x 36,000) Labor cost ($26 per unit x 36,000) Manufacturing supplies ($9 x 36,000) Batch-level costs (18 batches at $6,000 per batch) $1,044,000 936,000 324,000 108,000 300,000 370,000 $3,082,000 Product-level costs Facility-level costs Total costs Cost per unit = $3,082,000 + 36,000 = $85.61 Required a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order? b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the special order. Should CIC accept the special order? (For all requirements, round "Cost per unit" to 2 decimal places.) a Cost per unit Should CIC accept the special order? Cost per unit Should CIC accept the special order?

Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice cream bars is shown below. Materials cost ($29 per unit x 36,000) Labor cost ($26 per unit x 36,000) Manufacturing supplies ($9 x 36,000) Batch-level costs (18 batches at $6,000 per batch) $1,044,000 936,000 324,000 108,000 300,000 370,000 $3,082,000 Product-level costs Facility-level costs Total costs Cost per unit = $3,082,000 + 36,000 = $85.61 Required a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order? b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the special order. Should CIC accept the special order? (For all requirements, round "Cost per unit" to 2 decimal places.) a Cost per unit Should CIC accept the special order? Cost per unit Should CIC accept the special order?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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