Managerial Accounting, Student Value Edition (5th Edition)

5th Edition

ISBN: 9780134067179

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

See similar textbooks

Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing …

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In compari…

Videos

Textbook Question

Chapter 3, Problem 3.62ACT

Issues with cost of job (Learning Objectives 2, 3, & 4)

Custom Cookies produces gourmet cookies with company logos for special promotions. The cookies are customized with the customer’s choice of shape, color, flavor, and decorations. Custom Cookies uses a job cost system and allocates manufacturing overhead based on direct labor cost. At the beginning of the most recent year, Custom Cookies calculated the cost per batch of dozen cookies as:

Direct materials (flour, sugar, butter, eggs, baking soda, vanilla)	$1.50
Direct labor (shape and decorate cookies)	0.50
Manufacturing overhead	0.90
Total manufacturing cost per dozen cookies	$2.90

In September, Chesrown Motor Group ordered 400 dozen cookies to present to its clients as holiday gifts. Delivery of the cookies to Chesrown would occur in early December. At the time of Chesrown Motor Group’s order, the selling price per dozen cookies was $7.25.

Chesrown Motor Group placed an order for an additional 100 dozen cookies in November, to be delivered with the original order of 400 dozen. However, since that original order, two events occurred that increased the cost of the cookies. First, the price of sugar skyrocketed due to bad weather in Brazil and India, two of the largest sugar suppliers in the world. Second, a new local cookie bakery is about to open in time for the holiday season and is aggressively trying to hire the cookie decorators from Custom Cookies. In response, Custom Cookies increased the hourly rate of the employees who decorate the cookies to keep those workers from going to work for the competition. All other costs at Custom Cookies have remained the same.

Because of these two events, Custom Cookies recalculated the cost of a dozen cookies as follows:

Direct materials (flour, sugar, butter, eggs, baking soda, vanilla)	$1.60
Direct labor (shape and decorate cookies)	0.65
Manufacturing overhead	1.17
Total manufacturing cost per dozen cookies	$3.42

Requirements

A. Do you agree with the cost analysis for the second order? Explain your answer.
B. Should the two orders be accounted for as one job or as two jobs in Custom Cookies’ system?
C. What sales price per box should Custom Cookies set for the second order? Explain why you have selected this per-box price. What are the advantages and disadvantages of this price?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 3, Problem 3.61ACT

Chapter 4, Problem 1QC

Students have asked these similar questions

Chapter 18 Homework 8 1 points QS 18-4 (Algo) Measuring costs using high-low method LO P1 Saved The following information is available for a company's maintenance cost over the last seven months. 100 190 110 Month Units Produced eBook June July August September October November 200 230 Ask December Maintenance Cost $ 3,950 5,390 4,110 ETT 140 4,590 5,550 6,030 3,150 Print References Mc Graw Hill Using the high-low method, estimate both the fixed and variable components of its maintenance cost. High-Low method - Calculation of variable cost per unit produced Cost at highest volume - Cost at lowest volume Highest volume-Lowest volume Total cost at the highest volume Variable costs at highest volume: Highest volume Variable cost per unit produced Total variable costs at highest volume Total fixed costs Total cost at the lowest volume Variable costs at lowest volume: Lowest volume Variable cost per unit produced Total variable costs at lowest volume Total fixed costs 230 units $ 3,150.00…

need this account subjects solution

What is the earnings yield of a single share for this financial accounting question?

Chapter 3 Solutions

Managerial Accounting, Student Value Edition (5th Edition)

Ch. 3 - (Learning Objective 1) For which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 3) The amount of manufacturing...Ch. 3 - (Learning Objective 4) Which of the following is...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - (Learning Objective 5) Assuming the amount of...Ch. 3 - Prob. 8QC Ch. 3 - Prob. 9QC Ch. 3 - Prob. 10QC

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Solution Summary: The author explains the cost analysis of the second order. Sugar is the primary raw material in the cookies, and CC has increased the hourly wage rate to stop attrition.

Concept explainers

Videos

Want to see the full answer?

Chapter 3 Solutions