Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 25,000 gallons

Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 25,000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 12,500 gallons and annual orders for Marcee's total 6,250 gallons. Variable manufacturing costs are $.80 per gallon, and annual fixed manufacturing costs are $33,800.

The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck orders 6,250 gallons in the summer and 6,250 gallons in the winter. Marcee's is closed in the winter and orders all 6,250 gallons in the summer.

Required:
(a)

Calculate the product cost for each season with excess capacity costs assigned to the season in which it is incurred. (Round your intermediate calculations and final answers to 2 decimal places.)

Product Cost

Winter = $3.50 per gallon

Summer = $2.15 per gallon

(b) Calculate the product cost for each season with excess capacity costs assigned to the season requiring it. (Round your intermediate calculations and final answers to 2 decimal places.)

Product Cost

Winter = $2.15 per gallon

Summer = $_______per gallon ???????

Step by Step Solution

3.39 Rating (158 Votes )

There are 3 Steps involved in it

Step: 1

A 1 a 2 Product cost 3 Winter 4 Overhead rate 3340026225 5 Production cost 2... 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_2

Step: 3

blur-text-image_3

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

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

3rd Edition

9780078025525, 9780077517359, 77517350, 978-0077398194

More Books

Students explore these related General Management questions