Question
Analyzing process cost elements across product types Mystic Bottling Company bottles popular beverages in the Bottling Department. The beverages are produced by blending concentrate with
Analyzing process cost elements across product types
Mystic Bottling Company bottles popular beverages in the Bottling Department. The beverages are produced by blending concentrate with water and sugar. The concentrate is purchased from a concentrate producer. The concentrate producer sets higher prices for the more popular concentrate flavors. A simplified Bottling Department cost of production report separating the cost of bottling the four flavors follows:
Orange | Cola | Lemon-Lime | Root Bear | |
Concentrate | $4,625 | $129,000 | $105,000 | $7,600 |
Water | 1,250 | 30,000 | 25,000 | 2,000 |
Sugar | 3,000 | 72,000 | 60,000 | 4,800 |
Bottles | 5,500 | 132,000 | 110,000 | 8,800 |
Flavor Changeover | 3,000 | 4,800 | 4,000 | 10,000 |
Conversion Cost | 1,750 | 24,000 | 20,000 | 2,800 |
Total Cost Transferred to finished goods | $19,125 | $391,800 | $324,000 | $36,000 |
Number of cases | 2,500 | 60,000 | 50,000 | 4,000 |
Beginning and ending work in process inventories are negligible, so they are omitted from the cost of production report. The flavor changeover cost represents the cost of cleaning the bottling machines between production runs of different flavors. A production run of a new flavor is produced after a flavor changeover from the previous flavor. Higher-demand e=flavor are produced in larger production runs, while smaller-demand flavors are produced in smaller production runs.
a. Determine the cost per case for each of the four flavors. Round your answers to two decimal places.
Orange
Cola
Lemon-Lines
Root Beer
b. Complete the following paragraph regarding the comparative cost information and results from above.
The cost per case of ________ is significantly above the cost per case of the other three flavors. Based on an analysis of the individual cost elements that determine the total cost divided by the number of cases, it appears that _______ are either bottled in short production runs, meaning more frequent changeovers or that each changeover is very difficult and expensive. The conversion cost per case is larger because the bottling line rate appears slower for _________ compared to ________.
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