PepsiCo produces two types of snacks, Chips and Pretzels. The following cost data is available: Cost Item
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Question:
PepsiCo produces two types of snacks, Chips and Pretzels. The following cost data is available:
Cost Item | Chips | Pretzels |
Direct Material | $0.3/unit | $0.4/unit |
Direct Labor | $0.1/unit | $0.15/unit |
Overhead | 200% of direct labor cost | 170% of direct labor cost |
Additional Information:
- Production for Chips: 2,000,000 units
- Production for Pretzels: 1,500,000 units
Requirements:
- Calculate the total cost for Chips and Pretzels.
- Determine the cost per unit for each product.
- Prepare a cost sheet for both products.
- Analyze the cost structure and suggest which product is more cost-effective.
- Discuss the implications of the cost structure on the pricing strategy.
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
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