Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 68P
Assigning Capacity Costs
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 90,000 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 45,000 packages and Mega Stores orders 15,000 packages annually. Variable
Required
What cost per package should the cost system report? Why? If you need more information to answer the question, describe it.
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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 99,000 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 64,800 packages and Mega Stores orders 24,000 packages annually. Variable
manufacturing costs are $28 per package, and annual fixed manufacturing costs are $561,000. 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 20,400 packages during the holidays and 44, 400 packages in the non-
holiday season. Mega Stores only carries Mercia's chocolates during the holidays. Required: a. Calculate
the product cost for…
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 90,000 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 45,000 packages and Mega Stores orders 15,000 packages annually. Variable manufacturing costs are $10 per package, and annual fixed manufacturing costs are $540,000.
Required:-
Part 1- What cost per package should the cost system report? Why? If you need more information to answer the question, describe it.
Refer to the information in part 1 above. The gourmet chocolate business has two seasons, holi days 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…
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 75,240 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 37,620
cases and Griswold orders 12,540 cases annually. Variable manufacturing costs are $24 per case, and annual fixed manufacturing
costs are $902,880.
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 12,540 packages
during the holidays and 25,080 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…
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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