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Question 1 a) Crisp Company has four product lines: sour cream, ice cream, yogurt, and butter. The allocated fixed costs are based on units sold
Question 1 a) Crisp Company has four product lines: sour cream, ice cream, yogurt, and butter. The allocated fixed costs are based on units sold and are unavoidable, Demand for individual products is not affected by changes in other product lines. 40% of the fixed costs are direct, and the other 60% are allocated. Results for June follow Sour Cream 2,000 $10,000 6,000 5,000 $ (1.000) Ice Cream 500 $20,000 13.000 2,000 $ 5.000 Butter 200 $20,000 4,800 7.000 $ 8.200 Yoqurt 400 $10,000 4,200 3,000 $ 2,800 Total 3,000 s60,000 28,000 17.000 $15.000 Units sold Revenue Variable departmental costs Fixed costs Net income (loss) Instruction Prepare an incremental analysis of the effect of dropping the sour cream product line. (3 marks) b)1. Distinguish between a standard cost and albudget cost. (2 Marks) 2.What is a standard cost? (1 Mark)
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