he New England Cheese Company produces two cheese spreads by blending mild cheddar cheese with extra sharp cheddar cheese. The cheese spreads are packaged in 12-ounce ontainers, which are then sold to distributors throughout the Northeast. The Regular blend contains 80% mild cheddar and 20% extra sharp, and the Zesty blend contains 60% mild heddar and 40% extra sharp. This year, a local dairy cooperative offered to provide up to 7,920 pounds of mild cheddar cheese for $1.20 per pound and up to 2,955 pounds of extra harp cheddar cheese for $1.40 per pound. The cost to blend and package the cheese spreads, excluding the cost of the cheese, is $0.20 per container. If each container of Regular is sold or $1.90 and each container of Zesty is sold for $2.20, how many containers of Regular and Zesty should New England Cheese produce?

he New England Cheese Company produces two cheese spreads by blending mild cheddar cheese with extra sharp cheddar cheese. The cheese spreads are packaged in 12-ounce ontainers, which are then sold to distributors throughout the Northeast. The Regular blend contains 80% mild cheddar and 20% extra sharp, and the Zesty blend contains 60% mild heddar and 40% extra sharp. This year, a local dairy cooperative offered to provide up to 7,920 pounds of mild cheddar cheese for $1.20 per pound and up to 2,955 pounds of extra harp cheddar cheese for $1.40 per pound. The cost to blend and package the cheese spreads, excluding the cost of the cheese, is $0.20 per container. If each container of Regular is sold or $1.90 and each container of Zesty is sold for $2.20, how many containers of Regular and Zesty should New England Cheese produce?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter19: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 15E: Big Als Inc. produces and sells various cuts of steak, including sirloin, ribeye, and T-bone. The...

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Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52 per case (a case contains 24 cans of nuts). Kaune sold 150,000 cases last year to the following three classes of customer: The supermarkets require special labeling on each can costing 0.04 per can. They order through electronic data interchange (EDI), which costs Kaune about 61,000 annually in operating expenses and depreciation. Kaune delivers the nuts to the stores and stocks them on the shelves. This distribution costs 45,000 per year. The small grocers order in smaller lots that require special picking and packing in the factory; the special handling adds 25 to the cost of each case sold. Sales commissions to the independent jobbers who sell Kaune products to the grocers average 8 percent of sales. Bad debts expense amounts to 9 percent of sales. Convenience stores also require special handling that costs 30 per case. In addition, Kaune is required to co-pay advertising costs with the convenience stores at a cost of 15,000 per year. Frequent stops are made to each convenience store by Kaune delivery trucks at a cost of 30,000 per year. Required: 1. Calculate the total cost per case for each of the three customer classes. (Round unit costs to four significant digits.) 2. Using the costs from Requirement 1, calculate the profit per case per customer class. Does the cost analysis support the charging of different prices? Why or why not? 3. What if Kaune charged the average price per case to all customer classes? How would that affect the profit percentages?
Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one gallon of consumable milk. Bart’s then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart’s normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (i.e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. What is the contribution to income from processing the consumable milk into butter?
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Green Grow Incorporated (GGI) manufactures lawn fertilizer. Because of the product’s very high quality, GGI often receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the precise mix of components advertised for that type of fertilizer. GGI’s operating capacity is 22,000 one-hundred-pound bags per month, and it currently is selling 20,000 bags manufactured in 20 batches of 1,000 bags each. The firm just received a request for a special order of 5,000 one-hundred-pound bags of fertilizer for $130,000 from APAC, a research organization. The production costs would be the same, but there would be no variable selling costs. Delivery and other packaging and distribution services would cause a one-time $2,500 cost for GGI. The special order would be processed in two batches of 2,500 bags each. (No incremental batch-level costs are anticipated. Most of the batch-level costs in this case are short-term fixed costs,…
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