Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 65P
Assigning Capacity Costs
Cathy and Tom’s Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 18,000 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 9,000 gallons and annual orders for Marcee’s total 4,500 gallons. Variable
Required
What cost per gallon should the cost system report? Why? If you need more information to answer the question, describe it.
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Students have asked these similar questions
Santora Company manufactures two products—toaster ovens and bread machines. The following data are available:
Toaster Ovens Bread Machines
Sales price $70 $170
Variable costs $50 $70
Santora can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Santora's production capacity is 1600 machine hours per month, and it can sell as many units of either type as it can produce. Which product and how many units should the company produce in a month to maximize profits? (Round machine hour per unit to two decimal places and your final answer to the nearest whole dollar.)
Reuben's Deli currently makes rolls for deli sandwiches it
produces. It uses 30,000 rolls annually in the production of
deli sandwiches. The costs to make the rolls are:
Costs
Reuben's Deli cost data
Amounts
Materials
Labor
Variable overhead
Fixed overhead
Increments
$0.24 per roll
0.40 per roll
0.16 per roll
0.20 per roll
A potential supplier has offered to sell Reuben the rolls for
$0.90 each. If the rolls are purchased, 30% of the fixed
overhead could be avoided. If Reuben accepts the offer, what
are the total costs to purchase the rolls?
Reuben's Deli currently makes rolls for deli sandwiches it
produces. It uses 30,000 rolls annually in the production of
deli sandwiches. The costs to make the rolls are:
Costs
Reuben's Deli cost data
Amounts
Materials
Labor
Variable overhead
Fixed overhead
Increments
$0.24 per roll
0.40 per roll
0.16 per roll
0.20 per roll
A potential supplier has offered to sell Reuben the rolls for
$0.90 each. If the rolls are purchased, 30% of the fixed
overhead could be avoided. If Reuben accepts the offer, what
will the effect on profit be?
Chapter 10 Solutions
Fundamentals of Cost Accounting
Ch. 10 - How are activity-based costing and activity-based...Ch. 10 - Can activity-based management be implemented...Ch. 10 - Prob. 3RQCh. 10 - What are some ways in which customers affect a...Ch. 10 - How is computing the cost of customers the same as...Ch. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Under what conditions should the cost of excess...Ch. 10 - In what ways does quality affect cost?Ch. 10 - What are the four categories in a cost of quality...
Ch. 10 - Prob. 11CADQCh. 10 - Prob. 12CADQCh. 10 - Consider a library that spends 25,000 to move most...Ch. 10 - Prob. 14CADQCh. 10 - Prob. 15CADQCh. 10 - You can get the cost of customers by first...Ch. 10 - Prob. 17CADQCh. 10 - Prob. 18CADQCh. 10 - Prob. 19CADQCh. 10 - Prob. 20CADQCh. 10 - Many if not most schools in the United States have...Ch. 10 - Prob. 22CADQCh. 10 - Prob. 23CADQCh. 10 - Prob. 25ECh. 10 - Prob. 26ECh. 10 - Prob. 27ECh. 10 - Cost Hierarchy for a Not-for-Profit Below are...Ch. 10 - Prob. 29ECh. 10 - Driver Identification Below are various activities...Ch. 10 - Activity-Based Costing of Customers Marvins...Ch. 10 - Activity-Based Costing of Customers Rock Solid...Ch. 10 - Prob. 33ECh. 10 - Prob. 34ECh. 10 - Prob. 35ECh. 10 - Activity-Based Costing of Suppliers Hult Games...Ch. 10 - Prob. 37ECh. 10 - Activity-Based Costing of Suppliers Kinnear...Ch. 10 - Prob. 39ECh. 10 - Resources Used versus Resources Supplied Tri-State...Ch. 10 - Prob. 41ECh. 10 - Resources Used versus Resources Supplied Conlon...Ch. 10 - Prob. 43ECh. 10 - Prob. 44ECh. 10 - Prob. 45ECh. 10 - Prob. 46ECh. 10 - Assigning Cost of Capacity Mimis Fixtures...Ch. 10 - Assigning Cost of Capacity Curts Casting...Ch. 10 - Prob. 49ECh. 10 - Costs of Quality The following represents the...Ch. 10 - Prob. 51ECh. 10 - Costs of Quality Nuke-It-Now manufactures...Ch. 10 - Prob. 53ECh. 10 - Cost of Quality: Environmental Issues Many...Ch. 10 - Prob. 55ECh. 10 - Prob. 56PCh. 10 - Activity-Based Reporting: Service Organization...Ch. 10 - Prob. 58PCh. 10 - Customer Profitability Carmel Company has a...Ch. 10 - Activity-Based Costing of Suppliers JFI Foods...Ch. 10 - Prob. 61PCh. 10 - Prob. 62PCh. 10 - Prob. 63PCh. 10 - Activity-Based Reporting: Manufacturing...Ch. 10 - Assigning Capacity Costs Cathy and Toms Specialty...Ch. 10 - Prob. 66PCh. 10 - Prob. 67PCh. 10 - Assigning Capacity Costs Mercia Chocolates...Ch. 10 - Prob. 69PCh. 10 - Prob. 70PCh. 10 - Prob. 71P
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