Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice cream bars is shown below. $1,044,000 936,000 Materials cost ($29 per unit x 36,000) Labor cost ($26 per unit x 36,000) Manufacturing supplies ($9 x 36,000) Batch-level costs (18 batches at $6,000 per batch) Product-level costs Facility-level costs 324,000 108,000 300,000 370,000 $3,082,000 Total costs Cost per unit = $3,082,000 + 36,000 - $85.61 Required a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order? b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the special order. Should CIC accept the special order? (For all requirements, round "Cost per unit" to 2 decimal places.) a. Cost per unit Should CIC accept the special order? b. Cost per unit Should CIC accept the special order?
Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice cream bars is shown below. $1,044,000 936,000 Materials cost ($29 per unit x 36,000) Labor cost ($26 per unit x 36,000) Manufacturing supplies ($9 x 36,000) Batch-level costs (18 batches at $6,000 per batch) Product-level costs Facility-level costs 324,000 108,000 300,000 370,000 $3,082,000 Total costs Cost per unit = $3,082,000 + 36,000 - $85.61 Required a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order? b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the special order. Should CIC accept the special order? (For all requirements, round "Cost per unit" to 2 decimal places.) a. Cost per unit Should CIC accept the special order? b. Cost per unit Should CIC accept the special order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cowboy Ice Cream Company (CIC) produces ice cream bars that it markets through a variety of grocery stores. It makes the ice cream
bars in batches of 2,000 units. CIC produced 36,000 ice cream bars during the prior accounting period. The cost of producing the ice
cream bars is shown below.
Materials cost ($29 per unit × 36,000)
Labor cost ($26 per unit × 36,000)
Manufacturing supplies ($9 x 36,000)
Batch-level costs (18 batches at $6,000 per batch)
Product-level costs
$1,044,000
936,000
324,000
108,000
300,000
370,000
$3,082,000
Facility-level costs
Total costs
Cost per unit = $3,082,000 + 36,000 = $85.61
Required
a. OnCue has offered to buy a batch of 500 ice cream bars for $68 each. CIC's normal selling price is $93 per unit. Calculate the
relevant cost per unit for the special order. Based on the preceding quantitative data, should CIC accept the special order?
b. OnCue offered to buy a batch of 2,000 ice cream bars for $68 per unit, calculate the relevant cost per unit for the special order.
Should CIC accept the special order?
(For all requirements, round "Cost per unit" to 2 decimal places.)
a.
Cost per unit
Should CIC accept the special order?
b.
Cost per unit
Should CIC accept the special order?
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