Remington Agricultural Products (RAP) produces organic cider with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. RAPs single plant has the capacity to make 76,680 cases of cider annually. Currently, RAP sells to only two customers: Savery's Organic Produce (SOP) and Griswold Food Stores (a chain of grocery stores). SOP orders 38,340 cases and Griswold orders 12,780 cases annually. Variable manufacturing costs are $28 per case, and annual fixed manufacturing costs are $920,160.

The organic cider business has two seasons, holidays and nonholidays. The holiday season lasts exactly four months (although it feels longer), and the nonholiday season lasts eight months. SOP orders the same amount each month, so SOP orders 12,780 packages during the holidays and 25,560 packages in the nonholiday season. Griswold only carries the organic cider during the holidays.

Required:

A. Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred.

B. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it

A.

Calculate the product cost for each season with excess capacity costs assigned to season in which it is incurred.

Product cost

Non- holidays		Per case
Holiday		per case

B.

Calculate the product cost for each season with excess capacity costs assigned to the season requiring it.

Product cost

Non- holidays		Per case
Holiday		per case