Semester Case - Cowboy Ice Cream, Inc. (cont.) As he prepares to operate both divisions of CIC for the first time, W.L. is unsure how to allocate the above costs. However, he does have estimates for the first month of planned operations of the ice cream truck (May). He plans to hire two part-time employees, who will each be guaranteed 20 hours per week, with the truck operating seven days a week. Including benefits and taxes, each employee will cost CIC $15 per hour. For May, the employees will work an estimated 180 total hours. For the truck, CIC orders ice cream from the manufacturer in bar form. Each bar costs $1.25. Based on previous summer operations, W.T. anticipates that 3,500 bars will be sold in May. He also anticipates that $100 will be spent on napkins and other paper supplies required to operate the truck. The bars for retail sale will be stored with the wholesale inventory. Inventory needed for the retail division will be picked up daily using the ice cream truck, Storage space is billed based on average square feet used on a monthly basis. For May, W.T. anticipates that storage and delivery charges will be $2,500. Delivery represents 40% of the amount charged. The manufacturer provides delivery to the cold storage facility and only the wholesale division requires delivery to its customers. The ice cream bars (only sold by the retail division) occupy about 20% of the space rented at the cold storage facility. For May, W. anticipates that $2.000 of gas will be required to operate the ice cream truck. In the summer months, W.1. anticipates he will work more hours and plans to pay himself a salary of $1.500 to manage the business. He anticipates he will work 180 hours in May, with 54 of those hours spent managing the retail division. W.T. also anticipates he will use $75 on administrative supplies during May. Finally, for May, he anticipates that the wholesale division will sell 4,000 units with an average manufacturing cost of $4.75 per unit. (a) Determine the estimated total cost and cost per unit for each division. Round all intermediate costs to the nearest whole cent. (b) Are there other costs W.I should likely take into consideration P12-19 Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses. and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $150 per package. She will continue to sell an existing product. EZRecords, which costs $100 per package. Ms. Garcia believes that the salesperson will spend approximately 20 hours selling EZ Records and 10 hours marketing Prooffice. Required: (a) Determine the estimated total cost and cost per unit of each product. assuming that the salesperson is able to sell 80 units of EZRecords and 50 units of PreOffice (b) Determine the estimated total cost and cost per unit of each product. assuming that the salesperson is able to sell 200 units of EzRecords and 100 units of Prooffice (c) Explain why the cost per unit figures calculated in Requirement a are different from the amounts calculated in Requirement b. Also explain how the differences in estimated cost per unit will affect pricing decisions. Semester Case - Cowboy Ice Cream, Inc. (cont.) As he prepares to operate both divisions of CIC for the first time, W.L. is unsure how to allocate the above costs. However, he does have estimates for the first month of planned operations of the ice cream truck (May). He plans to hire two part-time employees, who will each be guaranteed 20 hours per week, with the truck operating seven days a week. Including benefits and taxes, each employee will cost CIC $15 per hour. For May, the employees will work an estimated 180 total hours. For the truck, CIC orders ice cream from the manufacturer in bar form. Each bar costs $1.25. Based on previous summer operations, W.T. anticipates that 3,500 bars will be sold in May. He also anticipates that $100 will be spent on napkins and other paper supplies required to operate the truck. The bars for retail sale will be stored with the wholesale inventory. Inventory needed for the retail division will be picked up daily using the ice cream truck, Storage space is billed based on average square feet used on a monthly basis. For May, W.T. anticipates that storage and delivery charges will be $2,500. Delivery represents 40% of the amount charged. The manufacturer provides delivery to the cold storage facility and only the wholesale division requires delivery to its customers. The ice cream bars (only sold by the retail division) occupy about 20% of the space rented at the cold storage facility. For May, W. anticipates that $2.000 of gas will be required to operate the ice cream truck. In the summer months, W.1. anticipates he will work more hours and plans to pay himself a salary of $1.500 to manage the business. He anticipates he will work 180 hours in May, with 54 of those hours spent managing the retail division. W.T. also anticipates he will use $75 on administrative supplies during May. Finally, for May, he anticipates that the wholesale division will sell 4,000 units with an average manufacturing cost of $4.75 per unit. (a) Determine the estimated total cost and cost per unit for each division. Round all intermediate costs to the nearest whole cent. (b) Are there other costs W.I should likely take into consideration P12-19 Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses. and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $150 per package. She will continue to sell an existing product. EZRecords, which costs $100 per package. Ms. Garcia believes that the salesperson will spend approximately 20 hours selling EZ Records and 10 hours marketing Prooffice. Required: (a) Determine the estimated total cost and cost per unit of each product. assuming that the salesperson is able to sell 80 units of EZRecords and 50 units of PreOffice (b) Determine the estimated total cost and cost per unit of each product. assuming that the salesperson is able to sell 200 units of EzRecords and 100 units of Prooffice (c) Explain why the cost per unit figures calculated in Requirement a are different from the amounts calculated in Requirement b. Also explain how the differences in estimated cost per unit will affect pricing decisions