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. RAP's single plant has the capacity to make 75,600 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 37,800 cases and Griswold orders 12,600 cases annually. Variable manufacturing costs are $25 per case, and annual fixed manufacturing costs are $907,200. 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 12,600 packages during the holidays and 25,200 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. Product cost Non-holiday ? Holiday ? per case Per case b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it Product cost Non-holiday Holiday ? ? per case Per case
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. RAP's single plant has the capacity to make 75,600 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 37,800 cases and Griswold orders 12,600 cases annually. Variable manufacturing costs are $25 per case, and annual fixed manufacturing costs are $907,200. 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 12,600 packages during the holidays and 25,200 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. Product cost Non-holiday ? Holiday ? per case Per case b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it Product cost Non-holiday Holiday ? ? per case Per case
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 2CE: Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52...
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
A1
Transcribed Image Text: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. RAP's single plant has the capacity to
make 75,600 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 37,800 cases and Griswold orders
12,600 cases annually. Variable manufacturing costs are $25 per case, and annual fixed manufacturing
costs are $907,200.
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 12,600 packages during the holidays and 25,200 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.
Product cost
per case
Per case
b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it
Product cost
Non-holiday ?
Holiday ?
Non-holiday
Holiday
?
?
per case
Per case
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 10 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning