Samantha decided to hire your consulting firm to help calculate the costs of two demonstrative flavours as an experiment to see it Laura's activity based costing system suggested produced any significant contrasts. She asked Laura to take her best estimate as to where she might find the most material differences, if any existed. After Samantha described the products to her, Laura suggested that She use Peanut Butter Bacon and Chocolate as the test product examples. Table 2 provides data relevant to the two selected products Budget Autry level Table 1 ARY Purchant Material Handling Miche Ching Cannes Led Bunge MORE Budgeted Cut 50001 Orier $ 50.000 Marchase Order 5 71250 Number of se $ 92.500 Mint 5 111150 Chha $ 2.500 Panin hours 5 11 500 5 450.000 1,76 920 1156 1020 Quity Control TO MOHON Table 1 Direct MM) Director DU tuged Production Such Number of tie of Purchase Order Tina in mi Time in Time in de machine Canada con Ind.. Two Produit Examples Pemuter Bacon 5 2.20 per $ 140 person 1.500 100 pln 3 perbuch 40 for 0.0 hour per 100 1.0 hour per 100g 0.50 hour 300 Choc $150 per $ 1.40 per 30.000 ans 1000 god 3 perbach 500 0.30 hour 100 150 hour per 100 g 0.5 per 100 Case Questions 7 Titilin the info Case Questions 1 Utilizing the information above, calculate the full product cost for a per gallon basis of the Peanut Butter Bacon and choco flavours utilizing a Samantha's more traditional costing system, Laura's suggestion to use activity based costing 2. What are the impacts. If there is any at all of switching Sus costing method in particular are the any significant contrasts between traditional costing and activity based costing in terms of Their impact on costs for independent products Their effect on Custotal firm income assuming everything else remains the same, such as production and sales prices if there are significant contrasts, why are they present if there are no significant contrasts, why are they not present a What would you recommend to be Samantha's next step based on this analysis? Explain C Faluation Canada Snowcones Ltd is owned and operated 20 retail frozen yogurt stores spread throughout Southern Ontario from Toronto to Windsor. CSL's stores sold only high quality, premium frozen yogurt. They offered an assortment of 35 different frozen yogurt flavours. significant amount of the CSL llavours were special, such as "Peanut Butter Bacon", "Charcoal Sushi", and "Tropical Cheese Sensations However, CSL also sold a few of the classic frozen yogurt flavours, such as vanilla, milk chocolate mint and other singular fruit flavours Wwwe some of the flavours were very popular, there were also some of the more peculiar flavours that had fow total sales in terms of units. CSL produced its own frozen yogurt. The founder of the company, Samantha Reynolds, had originally made the yogurt in her basement But eventual growing demand led to Samantha renting part of factory for CSL's production A CSL grow, Samantha was able to afford automated but more costly production equipment that blended the favours and packaged the liquid frozen yogurt for freezing. CSL'S most sigricant production costs were for raw materials, particularly yogurt, brown sugar, and the special flavour ingredients, and for the purchase, operation, and maintenance of production equipment All or sus products had the same retail price, as customers could choose or combine any favours by scoops. Samantha set the prices to generate an average, a markup of 100% on average full production costs CSL 2019 budget included manufacturing overhead (MOH) of $450,000. To estimate product costs, Samantha spread this MOH cost to products based on a proportion of the direct labour (DLL costs used in the production process. Custotalol costs for 2019 was $200,000, sa Samantha charged the overhead to products at a rate of MOH to tatal OL costs Last week, Laura Horton, Samantha's babysitter for her daughter and the CEO of a large production firm, advised that Samantha pricing strategy was not optimal Lauras insight was that the expenses for producing CSS numerous flavours were not undform. She thought those inconsistencies should be reflected in the prices charged, or CSL's earnings would fluctuate as the combination or favours said varied Laura proposed that Samantha reestimate product costs using activity based costing. She recommended that Samantha identity the major activities were costs were included in the company MOHcosts. Then she should apply these costs to products based on the products consumption of each of these activities, in response to Laura's suggestions: Samantha prepared the information presented benwin Tahir Samantha decided to hire your consulting firm to help calculate the costs of two demonstrative flavours as an experiment to see it Laura's activity based costing system suggested produced any significant contrasts. She asked Laura to take her best estimate as to where she might find the most material differences, if any existed. After Samantha described the products to her, Laura suggested that She use Peanut Butter Bacon and Chocolate as the test product examples. Table 2 provides data relevant to the two selected products Budget Autry level Table 1 ARY Purchant Material Handling Miche Ching Cannes Led Bunge MORE Budgeted Cut 50001 Orier $ 50.000 Marchase Order 5 71250 Number of se $ 92.500 Mint 5 111150 Chha $ 2.500 Panin hours 5 11 500 5 450.000 1,76 920 1156 1020 Quity Control TO MOHON Table 1 Direct MM) Director DU tuged Production Such Number of tie of Purchase Order Tina in mi Time in Time in de machine Canada con Ind.. Two Produit Examples Pemuter Bacon 5 2.20 per $ 140 person 1.500 100 pln 3 perbuch 40 for 0.0 hour per 100 1.0 hour per 100g 0.50 hour 300 Choc $150 per $ 1.40 per 30.000 ans 1000 god 3 perbach 500 0.30 hour 100 150 hour per 100 g 0.5 per 100 Case Questions 7 Titilin the info Case Questions 1 Utilizing the information above, calculate the full product cost for a per gallon basis of the Peanut Butter Bacon and choco flavours utilizing a Samantha's more traditional costing system, Laura's suggestion to use activity based costing 2. What are the impacts. If there is any at all of switching Sus costing method in particular are the any significant contrasts between traditional costing and activity based costing in terms of Their impact on costs for independent products Their effect on Custotal firm income assuming everything else remains the same, such as production and sales prices if there are significant contrasts, why are they present if there are no significant contrasts, why are they not present a What would you recommend to be Samantha's next step based on this analysis? Explain C Faluation Canada Snowcones Ltd is owned and operated 20 retail frozen yogurt stores spread throughout Southern Ontario from Toronto to Windsor. CSL's stores sold only high quality, premium frozen yogurt. They offered an assortment of 35 different frozen yogurt flavours. significant amount of the CSL llavours were special, such as "Peanut Butter Bacon", "Charcoal Sushi", and "Tropical Cheese Sensations However, CSL also sold a few of the classic frozen yogurt flavours, such as vanilla, milk chocolate mint and other singular fruit flavours Wwwe some of the flavours were very popular, there were also some of the more peculiar flavours that had fow total sales in terms of units. CSL produced its own frozen yogurt. The founder of the company, Samantha Reynolds, had originally made the yogurt in her basement But eventual growing demand led to Samantha renting part of factory for CSL's production A CSL grow, Samantha was able to afford automated but more costly production equipment that blended the favours and packaged the liquid frozen yogurt for freezing. CSL'S most sigricant production costs were for raw materials, particularly yogurt, brown sugar, and the special flavour ingredients, and for the purchase, operation, and maintenance of production equipment All or sus products had the same retail price, as customers could choose or combine any favours by scoops. Samantha set the prices to generate an average, a markup of 100% on average full production costs CSL 2019 budget included manufacturing overhead (MOH) of $450,000. To estimate product costs, Samantha spread this MOH cost to products based on a proportion of the direct labour (DLL costs used in the production process. Custotalol costs for 2019 was $200,000, sa Samantha charged the overhead to products at a rate of MOH to tatal OL costs Last week, Laura Horton, Samantha's babysitter for her daughter and the CEO of a large production firm, advised that Samantha pricing strategy was not optimal Lauras insight was that the expenses for producing CSS numerous flavours were not undform. She thought those inconsistencies should be reflected in the prices charged, or CSL's earnings would fluctuate as the combination or favours said varied Laura proposed that Samantha reestimate product costs using activity based costing. She recommended that Samantha identity the major activities were costs were included in the company MOHcosts. Then she should apply these costs to products based on the products consumption of each of these activities, in response to Laura's suggestions: Samantha prepared the information presented benwin Tahir