Mutt Butter is an emerging company that manufactures and sells peanut butter treats for dogs. Mutt Butter includes two ingredients: peanut butter, and added nutrient powder. The ratio of Peanut Butter to nutrient powder is 2:1. To make Mutt Butter, the ingredients are mixed in a food processor. Mutt Butter is packaged in 1.5oz. single-serve cups. Julia is the chef of Mutt Butter and her only role is to make the Mutt Butter. Mutt Butter is made in a commercial kitchen that Mutt Butter rents for a contracted 25 days a year at a rate of $3,750 per year. That rent includes the utilities and use of the food processor and packaging equipment. The kitchen facility will also store any packaged Mutt Butter and ingredients for free (up to 5,000 1.5oz. cups). Mutt Butter did one production run in 2015. The Ending Balance of inventory at the end of 2015 was as follows: In 2016, Mutt Butter produced 3000 units of Mutt Butter and sold 2,500 units of them (3,750oz.). Mutt Butter uses a LIFO inventory system. The net revenue from the sales was $12,500. During 2016, Mutt Butter incurred the following expenses: The ending balance at the end of 2016 was as follows: Please answer the following questions assuming that Mutt Butter uses Full Absorption costing unless specified otherwise: What is the Net Income for Mutt Butter in 2016? Question 5 4 pts Suppose at the end of the year, Mutt Butter received a call that the kitchen facility found an additional 100oz. package of peanut butter that cost $100. This discovery increased the ending balance of peanut butter in 2016 to $700. Assuming all else equal, how would this discovered error in the ending balance of Peanut Butter change the Cost of Goods Sold and the ending balance of Finished Mutt Butter? Decrease COGS by $83 and decrease the ending balance of Finished Mutt Butter by $17 Increase COGS by $83 and increase the ending balance of Finished Mutt Butter by $17 Decrease COGS by $100 and no effect on the ending balance of Finished Mutt Butter Increase COGS by $100 and no effect on the ending balance of Finished Mutt Butter Question 6 2 pts Julia is considering hiring a chef for production while she becomes a residual claimant and does not draw a salary. The chef has agreed to take on the job for a fixed salary of $3,000 a year plus a bonus if cost of goods manufactured per unit decreases by $0.20 compared with the cost of goods manufactured per unit in 2016. Assuming the cost per oz. of peanut butter, the cost per oz of nutrient mix, the cost per cup, and the rent remain the same, will the new chef earn a bonus if the chef produces 3,000 units? Yes No Question 7 2 pts Julia is considering hiring a chef for production while she becomes a residual claimant and does not draw a salary. The chef has agreed to take on the job for a fixed salary of $3,000 a year plus a bonus if the cost of goods manufactured per unit decreases by $0.20 compared with the cost of goods manufactured per unit in 2016. Assuming the cost per oz. of peanut butter, the cost per oz of nutrient mix, the cost per cup, and the rent remain the same, will the new chef earn a bonus if the chef produces 4,000 units? Yes No Suppose the chef has agreed to take on the job for a fixed salary of $3,000 a year plus a bonus if the variable cost of goods manufactured per unit decreases by $0.20 compared with the cost of goods manufactured per unit in 2016. Assuming the cost per oz. of peanut butter, the cost per 0z. of nutrient mix, the cost per cup, and the rent remain the same, will the new chef earn a bonus if the chef produces 3,000 units? Yes No Question 9 2 pts Suppose the chef has agreed to take on the job for a fixed salary of $3,000 a year plus a bonus if the variable cost of goods manufactured per unit decreases by $0.20 compared with the cost of goods manufactured per unit in 2016. Assuming the cost per oz. of peanut butter, the cost per oz. of nutrient mix, the cost per cup, and the rent remain the same, will the new chef earn a bonus if the chef produces 4,000 units? Yes No Question 10 2 pts Although Julia was committed to paying for 25 days to use the kitchen, she only used 20 days. What would happen to the total Cost of Goods Manufactured in 2016 if she were to sublet those 5 days to another chef for $750. Total COGM would increase by $750. Total COGM would decrease by $750. Total COGM would not change. Total COGM would increase by $625
