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 75,240 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 37,620 cases and Griswold orders 12,540 cases annually. Variable manufacturing costs are $24 per case, and annual fixed manufacturing costs are $902,880. 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 12,540 packages during the holidays and 25,080 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.

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 75,240 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 37,620 cases and Griswold orders 12,540 cases annually. Variable manufacturing costs are $24 per case, and annual fixed manufacturing costs are $902,880. 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 12,540 packages during the holidays and 25,080 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.

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...

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