Idaho Food Processors processes potatoes into French fries. Production requires two processes: cutting and cooking. Direct materials are added at the beginning of the cutting process (potatoes) and at the end of the cooking process (boxes). Conversion costs are incurred evenly throughout each process. Idaho uses the weighted-average method of process costing.

Assume that McDonalds offers Idaho $0.40 per pound to supply restaurants in the Far East. If Idaho accepts McDonalds offer, the cost (per equivalent unit of production) that Idaho will incur to fill the McDonalds order equals the April cost per equivalent unit of production. M. A. Keltner, manager of the cooking process, must prepare a report recommending whether Idaho should accept the offer. Keltner gathers the following information from Aprils cooking operations:

IDAHO FOOD PROCESSORS
Cooking Department April 20X8 Activity and Costs
Beginning Work-in-Process Inventory	12,000 pounds
Raw shoestring fries transferred in during April	129,000 pounds
French fries completed and transferred out	130,000 pounds
Ending Work-in-Process Inventory (20% of way through process)	11,000 pounds
Conversion costs within the Cooking Department to start 12,000 pounds of beginning Work-in-Process Inventory in March	$ 576
Costs added during April:
Direct materials	9,100
Conversion costs	15,420

Rita Mendez manages the cutting process. She reports the following data for her departments April operations:

Split your team into two groups. Each group should meet separately before a meeting of the entire team.

Requirements

1. The first group takes the role of M. A. Keltner, manager of the cooking production process. Before meeting with the entire team, determine the maximum transferred in cost per pound of raw shoestring fries the Cooking Department can incur from the Cutting Department if Idaho is to make a profit on the McDonalds order.

2. The second group takes the role of Rita Mendez, manager of the cutting process. Before meeting with the entire team, determine the April cost per pound of raw shoestring fries in the cutting process.

3. After each group meets, the entire team should meet to decide whether Idaho should accept or reject the McDonalds offer.