Located in a small town in upstate New York, Terry's Bakery operates a facility that makes pies for retail sale. The facility has the capacity to make 36,000 pies annually. The plant has only two customers, Panama Food Mart and East Street Coffee. Annual orders for Panama total 18,000 pies, and annual orders for East Street total 9,000 pies. Terry's makes the pies fresh every day and carries no inventory. It also ensure that the customers only sell freshly made pies as well. Variable manufacturing costs are $4.20 per pie, and annual fixed manufacturing costs are $97,200. The pie business in this town has two seasons, summer and winter. Each season lasts exactly six months. Panama Food Mart orders 9,000 pies in the summer and 9,000 pies in the winter. East Street Coffee is closed in the winter and orders all 9,000 pies in the summer. The owner of Terry's Bakery now believes that there are really three seasons instead of two, the third being the fall and spring (as a combined season). Each of the three seasons lasts exactly four months. They also know that East Street Coffee opens in mid-spring and closes in mid-fall. The manager at Terry's checks the order patterns and sees the following demand (in pies) in each of the three seasons: Panama Food Mart East Street Coffee Total Fall and Winter 6,000 Spring Summer Total 0 6,000 6,000 3,000 9,000 6,000 18,000 6,000 9,000 12,000 27,000 Design the cost system for Terry's Bakery showing the capacity costs and capacity in each season. Note: Round "Rate" and "Variable cost" to 2 decimal places. Required: Capacity Costs Winter Total 12,000 $ Unused 6,000 Fall/Spring 12,000 $ 3,000 Summer 12,000 0 Used $ 6,000 $ 9,000 $ 12,000 Charge for unused Total capacity costs Production (pies) Rate Variable cost Total cost 6,000 $ 9,000 $ 12,000 6,000 9,000 12,000 4.20 25,200.00 $ 4.20 4.20 37,800.00 50,400.00 $ 25,204.20 $ 37,804.20 $ 50,404.20 13
Located in a small town in upstate New York, Terry's Bakery operates a facility that makes pies for retail sale. The facility has the capacity to make 36,000 pies annually. The plant has only two customers, Panama Food Mart and East Street Coffee. Annual orders for Panama total 18,000 pies, and annual orders for East Street total 9,000 pies. Terry's makes the pies fresh every day and carries no inventory. It also ensure that the customers only sell freshly made pies as well. Variable manufacturing costs are $4.20 per pie, and annual fixed manufacturing costs are $97,200. The pie business in this town has two seasons, summer and winter. Each season lasts exactly six months. Panama Food Mart orders 9,000 pies in the summer and 9,000 pies in the winter. East Street Coffee is closed in the winter and orders all 9,000 pies in the summer. The owner of Terry's Bakery now believes that there are really three seasons instead of two, the third being the fall and spring (as a combined season). Each of the three seasons lasts exactly four months. They also know that East Street Coffee opens in mid-spring and closes in mid-fall. The manager at Terry's checks the order patterns and sees the following demand (in pies) in each of the three seasons: Panama Food Mart East Street Coffee Total Fall and Winter 6,000 Spring Summer Total 0 6,000 6,000 3,000 9,000 6,000 18,000 6,000 9,000 12,000 27,000 Design the cost system for Terry's Bakery showing the capacity costs and capacity in each season. Note: Round "Rate" and "Variable cost" to 2 decimal places. Required: Capacity Costs Winter Total 12,000 $ Unused 6,000 Fall/Spring 12,000 $ 3,000 Summer 12,000 0 Used $ 6,000 $ 9,000 $ 12,000 Charge for unused Total capacity costs Production (pies) Rate Variable cost Total cost 6,000 $ 9,000 $ 12,000 6,000 9,000 12,000 4.20 25,200.00 $ 4.20 4.20 37,800.00 50,400.00 $ 25,204.20 $ 37,804.20 $ 50,404.20 13
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 26E: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other...
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Transcribed Image Text:Located in a small town in upstate New York, Terry's Bakery operates a facility that makes pies for retail sale. The facility has the
capacity to make 36,000 pies annually. The plant has only two customers, Panama Food Mart and East Street Coffee. Annual orders
for Panama total 18,000 pies, and annual orders for East Street total 9,000 pies. Terry's makes the pies fresh every day and carries no
inventory. It also ensure that the customers only sell freshly made pies as well. Variable manufacturing costs are $4.20 per pie, and
annual fixed manufacturing costs are $97,200.
The pie business in this town has two seasons, summer and winter. Each season lasts exactly six months. Panama Food Mart orders
9,000 pies in the summer and 9,000 pies in the winter. East Street Coffee is closed in the winter and orders all 9,000 pies in the
summer.
The owner of Terry's Bakery now believes that there are really three seasons instead of two, the third being the fall and spring (as a
combined season). Each of the three seasons lasts exactly four months. They also know that East Street Coffee opens in mid-spring
and closes in mid-fall.
The manager at Terry's checks the order patterns and sees the following demand (in pies) in each of the three seasons:
Panama Food Mart
East Street Coffee
Total
Fall and
Winter
6,000
Spring
Summer
Total
0
6,000
6,000
3,000
9,000
6,000
18,000
6,000
9,000
12,000
27,000
Design the cost system for Terry's Bakery showing the capacity costs and capacity in each season.
Note: Round "Rate" and "Variable cost" to 2 decimal places.
Required:
Capacity Costs
Winter
Total
12,000 $
Unused
6,000
Fall/Spring
12,000 $
3,000
Summer
12,000
0
Used
$
6,000 $
9,000 $
12,000
Charge for unused
Total capacity costs
Production (pies)
Rate
Variable cost
Total cost
6,000 $
9,000 $
12,000
6,000
9,000
12,000
4.20
25,200.00
$
4.20
4.20
37,800.00
50,400.00
$ 25,204.20
$ 37,804.20 $ 50,404.20
13
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