After a few years, the company has become wildly successful In 2019, the company had $6 1 million in sales revenue and is on track to do $9 3 million this year Piece of Cake Pies uses natural and organic ingredients and offers three main product lines Singles , as the name suggests, are a single serving, ready to eat on a plate 9 inch pies are pre sliced and sold to distributors for foodservice applications or grocery in store bakery cases 10 inch pies are packed in strong, clear plastic domes to be sold in refrigerated cases and with custom labels The pies are available as a variety pack, a duo pack (two different flavors), or a full pie Elizabeth and Alicia love getting feedback from their customers 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 Table 1 Selected Financial Data (actual cost and revenue data for May 2020) Cost Category Behavior May 2020 Sales $766,667 Expenses Raw Materials Variable $327,934 Bakery labor Mixed $158,767 Administration Salaries Fixed $41,367 Supplies Variable $3,833 Freight Shipping In Variable $4,907 Freight Shipping Out Variable $64,707 Utilities Electricity Variable $9,813 Utilities Gas (ovens) Variable $3,067 Water Variable $920 Repairs Maintenance Fixed $4,293 Rent expense Fixed $19,167 Telephone Internet Fixed $2,300 Co owners salary Fixed $25,300 Brokers commissions Variable $30,667 Total Expenses $697,042 Operating Profit $69,625 Income Tax $22,280 Net operating income $47,345 Unit volume 64,500 Average Operating Assets $5,500,000 Minimum Rate of Return 8 00 What information does Piece of Cake Pies need Before recommending a cost system, it is helpful to understand a companys information needs Based on case information, discuss the types of cost information Piece of Cake Pies product costing system should be able to provide Of the expenses listed in Table 1, determine which should be treated as product costs and which should be treated as period costs for management decision making 3 For each product cost you identified, how would you track the cost For example, would you track it by individual job, batch, production step, activity, general factory overhead, etc Separate raw materials into main ingredients and flavor additives Also, separate bakery labor into four categories production line (includes mixing, filling, and baking), packaging, sanitation, and warehouse 4 For each specific cost item you listed in question 3, 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 customer order, or assign it using an allocation base (and identify the allocation base you would use) Again, separate raw materials into main ingredients and flavor additives

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After a few years, the company has become wildly successful. In 2019, the company had $6.1 million in sales revenue and is on track to

After a few years, the company has become wildly successful. In 2019, the company had $6.1 million in sales revenue and is on track to do $9.3 million this year.

Piece of Cake Pies uses natural and organic ingredients and offers three main product lines:

Singles, as the name suggests, are a single serving, ready to eat on a plate.

9-inch pies are pre-sliced and sold to distributors for foodservice applications or grocery in-store bakery cases.

10-inch pies are packed in strong, clear plastic domes to be sold in refrigerated cases and with custom labels. The pies are available as a variety pack, a duo-pack (two different flavors), or a full pie.

Elizabeth and Alicia love getting feedback from their customers 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.

Table 1: Selected Financial Data (actual cost and revenue data for May 2020)

Cost Category	Behavior	May 2020
Sales		$766,667
Expenses: Raw Materials	Variable	$327,934
Bakery labor	Mixed	$158,767
Administration Salaries	Fixed	$41,367
Supplies	Variable	$3,833
Freight & Shipping-In	Variable	$4,907
Freight & Shipping-Out	Variable	$64,707
Utilities – Electricity	Variable	$9,813
Utilities – Gas (ovens)	Variable	$3,067
Water	Variable	$920
Repairs & Maintenance	Fixed	$4,293
Rent expense	Fixed	$19,167
Telephone & Internet	Fixed	$2,300
Co-owners salary	Fixed	$25,300
Brokers’ commissions	Variable	$30,667
Total Expenses		$697,042
Operating Profit		$69,625
Income Tax		$22,280
Net operating income		$47,345
Unit volume		64,500
Average Operating Assets		$5,500,000
Minimum Rate of Return		8.00%

What information does Piece of Cake Pies need? Before recommending a cost system, it is helpful to understand a company’s information needs. Based on case information, discuss the types of cost information Piece of Cake Pies’ product costing system should be able to provide.

Of the expenses listed in Table 1, determine which should be treated as product costs and which should be treated as period costs for management decision making?

3. For each product cost you identified, how would you track the cost? For example, would you track it by individual job, batch, production step, activity, general factory overhead, etc.? Separate raw materials into main ingredients and flavor additives. Also, separate bakery labor into four categories: production line (includes mixing, filling, and baking), packaging, sanitation, and warehouse.

4. For each specific cost item you listed in question 3, 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 customer order, or assign it using an allocation base (and identify the allocation base you would use). Again, separate raw materials into main ingredients and flavor additives.