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Having some challenges with my accounting questions. Looking for a some help on these. QUESTIONS Nancy's Nut House is a processor and distributor of a
Having some challenges with my accounting questions. Looking for a some help on these.
QUESTIONS Nancy's Nut House is a processor and distributor of a variety of different nuts. The company buys n and roasts, seasons, and packages them for resale. Nancy's Nut House currently offers 15 different bags through catalogs and gourmet shops. The company's major cost is that of the raw nuts; howev automated roasting and packing processes consume a substantial amount of manufacturing overhe relatively little direct labor. Some of Nancy's nuts are very popular and sell in large volumes but a few of the newer types sell in Nancy's prices its nuts at cost (including overhead) plus a markup of 40%. If the resulting prices of c higher than the market price, adjustments are made. Though the company competes primarily on th customers are price conscious. Data for the budget include manufacturing overhead of $6,000,000, allocated on the basis of each p The budgeted direct labor cost for totals $1,200,000. Based on the sales budget and raw materials use of raw materials are expected to total $9,000,000 for the year. The unit costs of a one-pound bag of two of the company's products follows. Cashews $4.20 0.3 Raw materials Direct labor Nancy's controller believes that the traditional costing system may be providing misleading cost info developed the following analysis of the 2008 budgeted manufacturing costs. Activity Cost Driver Purchasing Purchase orders Material handling Number of setups Quality control Number of batches Roasting Roasting hours Seasoning Seasoning hours Packaging Packaging hours Total manufacturing overhead cost Data regarding the 2008 production of cashews and chestnuts follow. There will be no raw materials nuts at the beginning of the year. Expected sales Batch size Setups Purchase order size Roasting time Seasoning time Cashews 100,000 lbs. 10,000 lbs. 3 per batch 2500 lbs. 1 hour/100 lbs. .5 hour/100 lbs. Packaging time .1 hour/100 lbs. Directions: A B Using the current costing system, calculate the cost and selling price of one pound of cashews and o C What action do you suggest Nancy's Nut House should take regarding cashews and chestnuts? ety of different nuts. The company buys nuts from around the world y's Nut House currently offers 15 different types of nuts in one-pound s major cost is that of the raw nuts; however, the predominantly bstantial amount of manufacturing overhead cost. The company uses lumes but a few of the newer types sell in very low sales volumes. markup of 40%. If the resulting prices of certain nuts are significantly ugh the company competes primarily on the quality of its products, 000,000, allocated on the basis of each product's direct labor cost. ed on the sales budget and raw materials standards, purchases and he year. s products follows. Chestnuts $3.20 0.3 em may be providing misleading cost information, so she has nufacturing costs. Budgeted Activity 11,460 1,800 600 96,100 33,600 26,000 Budgeted Cost $1,146,000 1,440,000 300,000 1,922,000 672,000 520,000 $6,000,000 nuts follow. There will be no raw materials inventory for either type of Chestnuts 2,000 lbs. 500 lbs. 3 per batch 50 lbs. 1 hour/100 lbs. .5 hour/100 lbs. .1 hour/100 lbs. elling price of one pound of cashews and one pound of chestnuts. ke regarding cashews and chestnutsStep by Step Solution
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