Mercia Chocolates produces gourmet chocolate products with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. Mercia's single plant has the capacity to make 93,500 packages of chocolate annually. Currently, Mercia sells to only two customers: Vern's Chocolates (a specialty candy store chain) and Mega Stores (a chain of department stores). Vern's orders 52,700 packages and Mega Stores orders 18,500 packages annually. Variable manufacturing costs are $17 per package, and annual fixed manufacturing costs are $564,000. The gourmet chocolate business has two seasons, holidays and non-holidays. The holiday season lasts exactly four months and the non-holiday season lasts eight months. Vern's orders the same amount each month, so Vern's orders 17,100 packages during the holidays and 35,600 packages in the non-holiday season. Mega Stores only carries Mercia's chocolates during the holidays. 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.
Mercia Chocolates produces gourmet chocolate products with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. Mercia's single plant has the capacity to make 93,500 packages of chocolate annually. Currently, Mercia sells to only two customers: Vern's Chocolates (a specialty candy store chain) and Mega Stores (a chain of department stores). Vern's orders 52,700 packages and Mega Stores orders 18,500 packages annually. Variable manufacturing costs are $17 per package, and annual fixed manufacturing costs are $564,000. The gourmet chocolate business has two seasons, holidays and non-holidays. The holiday season lasts exactly four months and the non-holiday season lasts eight months. Vern's orders the same amount each month, so Vern's orders 17,100 packages during the holidays and 35,600 packages in the non-holiday season. Mega Stores only carries Mercia's chocolates during the holidays. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Mercia Chocolates produces gourmet chocolate products with no preservatives. Any production must be sold within a few days, so
producing for inventory is not an option. Mercia's single plant has the capacity to make 93,500 packages of chocolate annually.
Currently, Mercia sells to only two customers: Vern's Chocolates (a specialty candy store chain) and Mega Stores (a chain of
department stores). Vern's orders 52,700 packages and Mega Stores orders 18,500 packages annually. Variable manufacturing costs
are $17 per package, and annual fixed manufacturing costs are $564,000.
The gourmet chocolate business has two seasons, holidays and non-holidays. The holiday season lasts exactly four months and the
non-holiday season lasts eight months. Vern's orders the same amount each month, so Vern's orders 17,100 packages during the
holidays and 35,600 packages in the non-holiday season. Mega Stores only carries Mercia's chocolates during the holidays.
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.)
Product Cost
Non-holiday
per package
Holiday
per package
< Required A
Required B >
Transcribed Image Text: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 the season requiring it. (Round your
intermediate calculations and final answers to 2 decimal places.)
Product Cost
Non-holiday
per package
Holiday
per package
< Required A
Required B >
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