FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Mercia Chocolates produces gourmet chocolate products with no preservatives. Any production must be sold within a few days, so producing for inventory is not an option. Mercia's single plant has the capacity to make 90,000 packages of chocolate annually. Currently. Mercia sells to only two customers: Vern's Chocolates (a specialty candy store chain) and Mega Stores (a chain of department stores). Vern's orders 45,000 packages and Mega Stores orders 15,000 packages annually. Variable
Required:-
Part 1- What cost per package should the cost system report? Why? If you need more information to answer the question, describe it.
Refer to the information in part 1 above. The gourmet chocolate business has two seasons, holi days and non-holidays. The holiday season lasts exactly four months and the non-holiday season lasts eight months. Vern's orders the same amount each month, so Vern's orders 15,000 packages during the holidays and 30,000 packages in the non-holiday season. Mega Stores only carries Mercia's chocolates during the holidays.
Required:-
Part 2 - How would you modify, if at all, the cost system you designed previously for Mercia Chocolates in Part 1? Why?
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