Unit- and Batch-Level Cost DriversKC, a fast-food restaurant, serves fried chicken, fried fish, and French fries. The managers have estimated the costs of a batch of fried chicken for KC's all-you-can-eat Friday Fried Fiesta. Each batch must be 100 pieces. The chicken is precut by the chain headquarters and sent to the stores in 10-piece bags. Each bag costs $4. Preparing a batch of 100 pieces of chicken with KC's special coating takes one employee two hours. The current wage rate is $8 per hour. Another cost driver is the cost of putting fresh oil into the fryers. New oil, costing $6, is used for each batch. Round answers to two decimal places, when applicable. Determine the cost of preparing one batch of 100 pieces. If management projects that it will sell 300 pieces of fried chicken, determine the total batch and unit costs. If management estimates the sales to be 350 pieces, determine the total costs. How much will the batch costs increase if the government raises the minimum wage to $10 per hour? If management decided to reduce the number of pieces in a batch to 50, determine the cost of preparing 350 pieces. Assume that the batch would take half as long to prepare, and management wants to replace the oil after 50 pieces are cooked.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Unit- and Batch-Level Cost Drivers
KC, a fast-food restaurant, serves fried chicken, fried fish, and French fries. The managers have estimated the costs of a batch of fried chicken for KC's all-you-can-eat Friday Fried Fiesta. Each batch must be 100 pieces. The chicken is precut by the chain headquarters and sent to the stores in 10-piece bags. Each bag costs $4. Preparing a batch of 100 pieces of chicken with KC's special coating takes one employee two hours. The current wage rate is $8 per hour. Another cost driver is the cost of putting fresh oil into the fryers. New oil, costing $6, is used for each batch.
Round answers to two decimal places, when applicable.
- Determine the cost of preparing one batch of 100 pieces.
- If management projects that it will sell 300 pieces of fried chicken, determine the total batch and unit costs.
- If management estimates the sales to be 350 pieces, determine the total costs.
- How much will the batch costs increase if the government raises the minimum wage to $10 per hour?
- If management decided to reduce the number of pieces in a batch to 50, determine the cost of preparing 350 pieces. Assume that the batch would take half as long to prepare, and management wants to replace the oil after 50 pieces are cooked.
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