1) For each specific cost item you listed in table 1, how would you assign that cost to products to attain reasonably accurate product costs? For example, would you compute standard costs, trace it specifically to a customer order, or assign it using an allocation base (and identify the allocation base you would use). *please read the background information

Table 1

Product Expenses Track or Allocate Raw Materials Track Bakery Labor Track Administration Salaries Allocate Supplies Track Freight & Shipping In Track Freight & Shipping Out Track Utilities Electricity Allocate Utilities Gas (Ovens) Allocate Water Allocate Repairs & Maintenance Allocate Depreciation Expense -Plant Building Allocate 85% Depreciation Expense -Pastry Machines Allocate Depreciation Expense -Mixers Allocate Depreciation Expense -Filling Equipment Allocate Depreciation Expense -Oven Allocate Depreciation Expense -Freezers AllocateHumble Pies uses natural and organic ingredients, and combines Linda's Parisian techniques with Taylor's unexpected takes on classical southern desserts like Bacon Chocolate Chess, Avocado Key Lime and Chai Apple Pie. It offers two main product lines: a 10-inch whole pies are pre-sliced, boxed and sold to distributors for food service applications or grocery in-store bakery cases. 0 10-inch variety pies are packed in strong, clear plastic domes to be sold in refrigerated cases and with custom labels. The variety packs contain two pieces of each kind of pie. Linda and Taylor love getting feedback from their fans and are always testing new recipes based on suggestions or grocer suppliers' needs. They often receive requests from food chains for different types and sizes of pies, and must decide which ones to accept and which ones to pass on. Pie production Naturally, Linda and Taylor can't reveal their recipes, but they have provided some details on how the pies are made. Most pies go through a general four-step process: mixing, lling, baking and packaging. Humble Pies makes five different crusts mixed in large batches, and llings are produced in smaller batches depending on the production schedule. Next, crusts are placed in tins and lled with, well, the filling and baked for 45 minutes (20 at a time}. After they've cooled for an hour, pies are decorated, sliced, packaged, and labeled and placed on pallets to freeze until shipped. It takes about a week to complete a pie product order and the plant uses just-in- time production methods. Since contaminated food would lead to a visit by the Health Department (and possibly shutting down the factory), there are at least three sanitation workers on duty at all times. Generally, there are 3-4 warehouse workers on duty to handle the shipping, receiving and storage of raw materials and finished product. The plant typically runs two shifts per day with two production supervisors assigned to each shift. For each of the two product lines, the process is combined in the same production line until the packaging area. The process is the same regardless of the flavors or ingredients for the production line (mixing taking about 3 minutes per pie, lling taking about 5 seconds per pie, and baking.) However, the processes between the product lines ivery different in the packaging department, because the variety packs take much longer than for whole pies. Workers need to pull different flavor slices and place them in the same tin for the variety pack. Not to mention the packaging is different. The whole pies go in boxes while the variety pies go in lidded plastic containers. Both lines have similar labeling requirements. Humble Pies seldom places its own labels and logo on any of their products. Label designs generally come from the customer, so they vary based on each order. The plant currently has capacity to do 51 million in sales per month, but with additional investments in ovens, mixers and workstations (for about $500,000) it could increase to $1.5 million. October through December tends to be a higher volume period (with increased demand for holidays like Thanksgiving and New Year's), resulting in Humble Pies getting roughly 60% of its business during that time period. Because of the rush, the plant runs overtime and weekend shifts as needed to get the product to its suppliers. The owners believe the labeling process significantly slows down production time. Reports Humble Pies' managers rely heavily on a \"Labor Report\" to manage its work force. The report lists four salaried workers and approximately 50 hourly employees, expected number of work days for the month, hours er da icall 8 and total ro'ected hours for the month. The hours are multiplied by the employee pay rate (from 51050-51550 per hour} to get expected monthly gross pay amount for each hourly employee based on a 40-hour workweek. Production Table 1: Selected Financial Data (actual cost and revenue data for May 2018) Cost Category Behavior May 2018 Sales $766,667 Expenses: Raw Materials 1 Variable 327,934 Bakery labor 2 Mixed 158,767 Administration Salaries Fixed 41,367 Supplies Variable 3,833 Freight & Shipping-In Variable 4,907 Freight 8t. Shipping-Out Variable 64,707 Utilities Electricity Variable 9,813 Utilities Gas (ovens) Variable 3,067 Water Variable 920 Repairs 8r. Maintenance Fixed 4,293 Telephone 8: Internet Fixed 2,300 Co-owners' salary Fixed 25,300 Depreciation Expense: Plant Building $9,460 Pastry Machines 6,920 Mixers 7,832 Filling Equip. 7,471 Ovens 8,941 Warehouse Freezers w Total 9gp}; Fixed 49,834 Total Expenses 697,042 Operating Profit 69,625 Income Tax 22,280 Net operating income $47,345 Unit volume (30,980 whole, 33,520 variety) 64,500 units Average Operating Assets $5,500,000 Minimum Rate of Return 8.00% 1 Raw mandala: Crust ingredients ($.11) $7,120 Filling M455) 300,155 2 Labor: Production Supervisors' Salaries $34,929 Production line wages Packaging: ($10.50/E)= 51,613 Tins ($.08) 5,065 Packaging labor ($15.50/hr): Labels ($.076) 4,916 whole pies 7,016 Boxes ($.11) 3,617 variety pack 31,359 Plastic containers ($.22) LE Sanitation wages (lSBO/hr) 18,940 $327,934 Shipping 8: receiving wages (55-50%): Lem $158,767 Notes to Selected Financial Data Raw Materials: Includes main ingredients and flavor additives. Main ingredients are relatively higher cost items such as flour, sugar, eggs, nuts and fruit that appear on the package label. Flavor additives are relatively low-dollar cost items and a small part of the weight of the pie such as spices, dyes, salt, and certain oils that don't always appear on the package label. Besides the crust and filling ingredients, raw materials include the tins, packaging and labels. Bakery labor: The cost amount consists of 22% supervisory salaries and taxes and the rest hourly workers. Bakery labor workers are organized into four categories: production line (mixing, filling and baking), packaging, sanitation and warehouse (all included as part of cost of goods sold). Administration Salaries: Includes taxes and benefits for the Vice President of Operations, the Controller, Human Resources Manager and two administrative support people. Supplies: Includes supplies relating to production, decorating, sanitation and warehouse (think: adhesive, pastry bags, spatulas, scrapers, icing pens, gloves and so on). Freight 8: Shipping-In: The costs of shipping raw ingredients and other materials to the factory from suppliers. Freight 8: Shipping-Out: The costs of shipping finished products to customer locations and distribution centers. Utilities Electricity: Approximately 10% for administrative office and the remainder for the factory. The factory portion varies somewhat with production volume. Utilities Gas (ovens): The factory portion varies with production volume. Water: All for sanitation and varies proportionately with production volume. Repairs & Maintenance: All for production. Telephone & Internet: All for the administrative office. Co-owners' salary: Linda Jackson and Taylor Johnson. Brokers' commissions: Generally 4% of sales. Income Tax: Average total tax rate is 32%