Concept explainers
Assigning Capacity Costs
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
What cost per package should the cost system report? Why? If you need more information to answer the question, describe it.
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Fundamentals Of Cost Accounting (6th Edition)
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