Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local...
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Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 24,900 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 12,450 gallons and annual orders for Marcee's total 6,225 gallons. Variable manufacturing costs are $1.20 per gallon, and annual fixed manufacturing costs are $33,300.
The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck's orders 6,225 gallons in the summer and 6,225 gallons in the winter. Marcee's is closed in the winter and orders all 6,225 gallons in the summer.
b. Calculate the product cost for each season with excess capacity costs assigned to the season requiring it. (Round your intermediate calculations and final answers to 2 decimal places.)
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