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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 21
Assigning Capacity Costs
Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 18,000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas Go and Marcee's Drive Chew Drive- Thru. Annual orders for Chuck's total 9,000 gallons and annual orders for Marcee's total 4,500 gallons. Variable manufacturing costs are $1 per gallon, and annual fixed manufacturing costs are $27,000.
Required
What cost per gallon should the cost system report Why If you need more information to answer the question, describe it.
Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 18,000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas Go and Marcee's Drive Chew Drive- Thru. Annual orders for Chuck's total 9,000 gallons and annual orders for Marcee's total 4,500 gallons. Variable manufacturing costs are $1 per gallon, and annual fixed manufacturing costs are $27,000.
Required
What cost per gallon should the cost system report Why If you need more information to answer the question, describe it.
Explanation
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Cost accounting system
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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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