Part B: Calculate Product Costs B1: Compute New Standard Product Costs a: D.C. does not currently track actual cost information, but Kay has estimated some additional production data provided in Table 5. Using the approach(es) you recommended in Part A and the estimated data provided in Tables 1-5 and the Case, use Excel to compute estimated total cost, profit margin, and margin percentage for each of the four jobs identified in Table 5, Panel A.

B2: Special Order a: Starting with your standard bar costs from part B1, compute the estimated cost per bar for the new special order from the wellness products supplier for 200,000 1.25-oz. organic chocolate bars. The bars will have special stir-in ingredients that Kay estimates will cost about $10 per pound, and these ingredients will become about 7 percent of the finished weight of the bar. The additional labor required for stirring in these ingredients is estimated to be 10.5 hours at $12.50/hour for each batch of 10,000 bars. b: Compare your estimated cost per bar for the special order with the price, which is at a 20 percent discount off the normal price for these types of bars of $1.75. Will Kay make a profit on this order?

TABLE 1 Typical Prices and Costs of Chocolate 1.25 oz. Bar 3.0 oz. Bar 3.25 oz. Bar Price Per Bar . Non-Organic $1.40 $2.40 NA . Organic $1.50 NA $2.55 Cost of Chocolate . Non-Organic $0.18 $0.44 NA . Organic $0.33 NA $0.83 Cost of Foil $0.03 $0.06 $0.06 Cost of Label $0.03 $0.08 $0.08TABLE 2 Average Labor Rates and Capacity Volumes by Labor Area Area Labor Rate/Hour 1.25 oz. Bar 3.0 oz. Bar 3.25 oz. Bar Pouring $15.40 480 bars/hour 200 bars/hour 184 bars/hour Inspecting $11.00 240 bars/hour 480 bars/hour 480 bars/hour Foiling $9.90 175 bars/hour 175 bars/hour 175 bars/hour Labeling $9.90 175 bars/hour 175 bars/hour 175 bars/hour a Includes payroll taxes and benefits.TABLE 3 Budgeted Monthly Overhead Cost Breakdown Cost Item Admin. Costs Production Area Supplies Salaries Customer Service Lease Payments Total Budgeted Overhead Costs Amount $1 ,000 3,800 10,000 3,000 2,000 $19,800 TABLE 4 How Kay Estimates Cost and Profitability Per Bar Panel A: Compute Estimated Materials Costs Per Bar Material 1.25 oz. 3.0 oz. 3.25 oz. Non-Organic Chocolate $0.18 $0.44 NA Organic Chocolate 0.33 NA $0.83 Foil 0.03 0.06 $0.06 Label 0.03 0.08 $0.08 Total Non-Organic $0.24 $0.58 NA Total Organic $0.39 NA $0.97 There would be additional costs for certain flavor additives. Panel B: Compute Estimated Labor Costs Per Bar (Labor Rate : Bars Per Hour from Table 2) Labor Area 1.25 oz. 3.0 oz. 3.25 oz. Pouring Area $0.03 $0.08 $0.08 Inspection Area 0.05 0.02 0.02 Foiling Area 0.06 0.06 0.06 Labeling Area 0.06 0.06 0.06 Total Labor Cost Per Bar $0.20 $0.22 $0.22 Panel C: Compute Estimated Overhead Cost Per Bar Total Overhead Costs $19,800 Bottleneck Bars/Hour 175.0 Hours/Day X 8.0 Avg. Work Days Per Month X 20.5 Capacity Volume Per Month + 28,700 Overhead Cost Per Bar $0.69 Panel D: Compute Estimated Profitability Per Bar 1.25 oz. 1.25 oz. 3.0 oz. 3.25 oz. Organic Non-Organic Non-Organic Organic Price Per Bar $1.50 $1.40 $2.40 $2.55 Cost Per Bar Total Materials Costa 0.39 0.24 0.58 0.97 Total Labor Cost 0.20 0.20 0.22 0.22 Overhead Cost Per Bar 0.69 0.69 0.69 0.69 Total Cost Per Bar $1.28 $1.13 $1.49 $1.88 Profit Per Bar $0.22 $0.27 $0.91 $0.67 Profit Percentage 14.7% 19.3% 37.9% 26.3% Additional costs required for certain flavor additives.TABLE 5 (continued) Panel D: Activity-Based Information Actual Activity Amount Level Area Supplies $3,600 Unit-level Setting Up Melting Pots 2,000 Batch Purchasing 2,000 Batch Filling Orders 6,300 Customer Designing Labels 4,000 Customer Facility-Related Costs 1,900 Facility Total Overhead Costs $19,800 Panel E: Area-Specic Activity Pouring Inspection Purchase Orders 60 0 Square Feet 750 750 Panel F: Job-Specic Activity Volumes Job 1 Job 2 Activity 1.25I0rg. 1.25/N0n-Org. Setups 10 5 Design Hours 5.0 4.0 Labor Hours Pouring 22.00 11.00 Inspection 45.00 23.00 Failing 58.00 29.00 Labeling 58.00 29.00 Driver Trace to areas Setups Purchase orders # Orders Design hours Square feet Felling Labeling 4 16 750 750 Job 3 3.0!Non-Org. 1 2.0 1.00 0.50 1.20 1.20 Actual Volume 100.0 80.0 500.0 40 3,000 Total 80 3,000 Job 4 3.25/0rg. 1.75 0.75 1.75 1.75 TABLE 5 Additional Estimated Data for Part B Panel A: Job-Specific Information Job 1 Job 2 Job 3 Job 4 Other Total 1.25/Org. 1.25/Non-Org. 3.0/Non-Org. 3.25/Org. Jobs Month No. of Bars 10,000 5,000 200 300 10,500 26,000 Cost of Chocolate $3,135 $945 $84 $274 $3,162 $7,600 Cost of Foil 274 133 11 18 374 810 Cost of Label 347 163 16 21 283 830 $3,756 $1,241 $111 $313 $3,819 $9,240 Panel B: Beginning Work-In-Process (BWIP), Direct Labor (DL), and Overhead (OH) Costs Added (Per Month) BWIP- BWIP- DL OH Total Materials CC Added Added Added Pouring/Inspection $1,550 $757 $2,348 $1,800 $4,148 Foiling $0 $0 $1,430 400 1,830 Labeling $0 $0 $1,016 1,400 2,416 Total Area Costs Added $3,600 $8,394 Other Overhead Costs Supplies $200 $200 Admin. Costs 1,000 1,000 Salaries 10,000 10,000 Customer Service 3,000 3,000 Lease Payments 2,000 2,000 Total Other Overhead $16,200 $16,200 Total Costs Added $1,550 $757 $4,794 $19,800 $24,594 Represents supplies costs traced directly to labor areas. Represents other overhead costs that cannot be directly traced to labor areas. Panel C: Expected Monthly Production Volume (in Bars) EWIP Type of Production Total Bars 1.25 oz. 3.0/3.25 oz. Comp. Beginning WIP in Pouring/Inspection 3,000 2,500 500 Bars started in Pouring/Inspection 26,000 25,000 1,000 Bars completed in Pouring/Inspection 27,000 26,500 500 50% Bars Foiled 26,600 26,125 475 0% Bars Labeled (assume 25 percent bright stock) 19,950 19,594 356 0%