Problem 10-78 (Algo) Assigning Capacity Costs: Seasonality (LO 10-6) Remington Agricultural Products (RAP) produces organic cider with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. RAP's single plant has the capacity to make 73,440 cases of cider annually. Currently, RAP sells to only two customers: Savery's Organic Produce (SOP) and Griswold Food Stores (a chain of grocery stores). SOP orders 36.720 cases and Griswold orders 12.240 cases annually. Variable manufacturing costs are $19 per case, and annual fixed manufacturing costs are $881,280. The organic cider business has two seasons, holidays and nonholidays. The holiday season lasts exactly four months (although it feels longer), and the nonholiday season lasts eight months. SOP orders the same amount each month, so SOP orders 12,240 packages during the holidays and 24,480 packages in the nonholiday season. Griswold only carries the organic cider during the holidays. Required:
Problem 10-78 (Algo) Assigning Capacity Costs: Seasonality (LO 10-6) Remington Agricultural Products (RAP) produces organic cider with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. RAP's single plant has the capacity to make 73,440 cases of cider annually. Currently, RAP sells to only two customers: Savery's Organic Produce (SOP) and Griswold Food Stores (a chain of grocery stores). SOP orders 36.720 cases and Griswold orders 12.240 cases annually. Variable manufacturing costs are $19 per case, and annual fixed manufacturing costs are $881,280. The organic cider business has two seasons, holidays and nonholidays. The holiday season lasts exactly four months (although it feels longer), and the nonholiday season lasts eight months. SOP orders the same amount each month, so SOP orders 12,240 packages during the holidays and 24,480 packages in the nonholiday season. Griswold only carries the organic cider during the holidays. Required:
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:The organic cider business has two seasons, holidays and nonholidays. The holiday season lasts exactly four months (although it feels
longer), and the nonholiday season lasts eight months. SOP orders the same amount each month, so SOP orders 12,240 packages
during the holidays and 24 480 packages in the nonholiday season. Griswold only carries the organic cider 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.
Product Cost
per case
per case
Non-holiday
Holiday
Required A
Required B >
Transcribed Image Text:Problem 10-78 (Algo) Assigning Capacity Costs: Seasonality (LO 10-6)
Remington Agricultural Products (RAP) produces organic cider with no preservatives. Any production must be sold within a few days,
so producing for inventory is not an option. RAP's single plant has the capacity to make 73,440 cases of cider annually. Currently, RAP
sells to only two customers: Savery's Organic Produce (SOP) and Griswold Food Stores (a chain of grocery stores). SOP orders 36.720
cases and Griswold orders 12.240 cases annually. Variable manufacturing costs are $19 per case, and annual fixed manufacturing costs
are $881,280.
The organic cider business has two seasons, holidays and nonholidays. The holiday season lasts exactly four months (although it feels
longer), and the nonholiday season lasts eight months. SOP orders the same amount each month, so SOP orders 12,240 packages
during the holidays and 24,480 packages in the nonholiday season. Griswold only carries the organic cider during the holidays.
Required:
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