Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Annie s Homemade has been invited to submit a bid to cater a Memorial Day picnic with 6 0 servings of four flavors for a

Annies Homemade has been invited to submit a bid to cater a Memorial Day picnic with 60 servings of four flavors for a total of 240 pre-packaged servings of ice cream. Annies average ingredient and packaging costs (including cup, lid, spoon, and stickers) are $1.50 per serving. It would cater the event with one manager, whose is paid an annual salary of $40,000(or an average of $20.00 per hour), and two additional employees who are paid $8.00 per hour. The wedding party expects Annies staff to remain on-site for two hours to serve ice cream. The round-trip drive time to the event plus the tent setup and breakdown time is 1.50 hours. The wedding is 40 miles round-trip and the company pickup trucks diesel fuel, diesel exhaust fluid, and oil expenses are $0.75 per mile.
The manager catering the wedding would also spend 3.5 hours manufacturing the ice cream for the picnic and portioning it into six-ounce paper cups. He would be assisted by one employee for two hours who would apply a branded flavor sticker and an ingredient label before securing one lid on each cup of ice cream. The company can fulfill the order with its existing capacity and has gathered the following information with respect to its annual fixed overhead:
In-store Manufacturing overhead (e.g., equipment depreciation, rent, utilities, insurance, etc.)..... $ 48,000
Number of servings produced per year (including mobile servings).....80,000
Pickup truck depreciation, insurance, registration, and vehicle tax..... $ 10,000
Mobile sales equipment depreciation (e.g., trailer, mobile freezer and serving tent)..... $ 3,000
Number of mobile servings sold per year..... 16,250
The total bid price splits into two piecesgross revenue and state and local sales tax (7%). Then, 5% of the gross revenue will be paid to Annies Homemades corporate headquarters as a royalty fee. Since the picnic sponsor plans to pay with a credit card, 3% of the total bid price will be paid to the credit card company for processing the payment. Assume Annies bids $1,080 for this job (or $4.50 per serving). If it wins the bid, how much of the total bid receipts:
Will be recorded as gross sales revenue?
Will be paid to governing authorities as sales tax?
Will be paid to Annies Homemade corporate headquarters?
Will be disbursed to the company that processes the credit card payment?
Will be recorded as net sales revenue?
6. If Annies bids $1,080(or $4.50 per serving) for this job, what profit (loss) would it realize using your total estimated job cost from requirement 4?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Decision Making and Motivating Performance

Authors: Srikant M. Datar, Madhav V. Rajan

1st edition

132816245, 9780132816243, 978-0137024872

More Books

Students also viewed these Accounting questions

Question

Describe the three major subdivisions of the Malleus Maleficarum.

Answered: 1 week ago

Question

Determine the effects of taxation on a hospitality business.

Answered: 1 week ago