Please help me answer all Parts of A and B

ISSUES IN ACCOUNTING EDUCATION Vol. 28, No. 3 2013 pp. 637-652 DOI: 10.2308/iace-50464 Dream Chocolate Company: Choosing a Costing System Kip R. Krumwiede and W. Darrell Walden INTRODUCTION ay Johnson sat back in his chair wondering about what he had just done. He accepted a special order from a national supplier of wellness products for 200,000 chocolate bars at a 20 percent discount from the usual price. It is a new type of bar and the company provided the recipe. The company also hinted about a second order for 150,000 bars if the first order was successful. Kay sighed and thought, I hope we can make a profit on this order, because we are K: going to have to increase our capacity big-time to fll it. Wish I knew what the cost will be." OVERVIEW OF COMPANY Dream Chocolate (D.C.) is the major product line of Salmon River Foods, the spawn of a trip on the Middle Fork of the Salmon River in Boise, Idaho. President Kay Johnson was burned out by 30 years in the food service industry and decided to sell his business and begin anew. Quite by accident, he received a call asking if his new company Salmon River Foods would consider selling Kip R. Krumwiede and W. Darrell Walden are both Associate Professors at the University of Richmond. We thank David E. Stout, Shannon L. Charles, and Nick Fessler for helpful comments. We also thank Kay Johnson, owner of Dream Chocolate, for his support throughout the project. This case is based on a real company, but quantitative information used in the case is disguised for confidentiality Published Online: March 2013 637 ISSUES IN ACCOUNTING EDUCATION Vol. 28, No. 3 2013 pp. 637-652 DOI: 10.2308/iace-50464 Dream Chocolate Company: Choosing a Costing System Kip R. Krumwiede and W. Darrell Walden INTRODUCTION ay Johnson sat back in his chair wondering about what he had just done. He accepted a special order from a national supplier of wellness products for 200,000 chocolate bars at a 20 percent discount from the usual price. It is a new type of bar and the company provided the recipe. The company also hinted about a second order for 150,000 bars if the first order was successful. Kay sighed and thought, I hope we can make a profit on this order, because we are K: going to have to increase our capacity big-time to fll it. Wish I knew what the cost will be." OVERVIEW OF COMPANY Dream Chocolate (D.C.) is the major product line of Salmon River Foods, the spawn of a trip on the Middle Fork of the Salmon River in Boise, Idaho. President Kay Johnson was burned out by 30 years in the food service industry and decided to sell his business and begin anew. Quite by accident, he received a call asking if his new company Salmon River Foods would consider selling Kip R. Krumwiede and W. Darrell Walden are both Associate Professors at the University of Richmond. We thank David E. Stout, Shannon L. Charles, and Nick Fessler for helpful comments. We also thank Kay Johnson, owner of Dream Chocolate, for his support throughout the project. This case is based on a real company, but quantitative information used in the case is disguised for confidentiality Published Online: March 2013 637