Solution
Khushboo answered on
Apr 23 2021
STAGE 1
Solution 1:
The LP is competing using the differentiation strategy which is on the basis of the high quality candy, flavors and the packaging. Further on the basis of this strategy LP requires the cost system which can easily deal with different types of pies for the decision making in relation to the pricing, product offerings and the special orders (Handlin, Amy). It is also mentioned that all the pies go through the same production process and the cost system of the entity is not required to track the specific labor and overhead per individual pie or the even order. Thus concluding the cost system in place is required to give accurate product costs for the specific orders and the different types of pies within the different variety of the product combination.
Solution 2:
The product costs include such costs which are necessary in making the products such as direct materials and direct labor and factory overhead (Keythman, Bryan.2019). Although in the decision making the management of the entity can assign any cost to the product which can be directly traced to the product.
Cost Category
Product
Period
Raw Materials
$327,934
0
Bakery labor
158,767
0
Administration Salaries (incl. taxes and benefits)
41,367
0
Supplies (e.g., spices, spoons, packaging)
3,833
0
Freight & Shipping-In
4,907
0
Freight & Shipping-Out
64,707
0
Utilities Electricity
9,813
0
Utilities Gas (ovens)
3,067
0
Water
920
0
Repairs & Maintenance
4,293
0
Rent expense (Building; 85% production, 15% admin)
16,292
2,875
Telephone & Internet (administrative)
0
2,300
CEO salary
0
25,300
Brokers’ commissions (4% of sales)
0
30,667
Total Expenses
$635,900
$61,142
Solution 4
Cost Category
Track by:
Assign to Products:
Raw Materials
By product type (average cost)
Standard cost
Bakery Labor:
1. Production (incl. mix, pour, bake, freeze)
By batch or product type
Direct cost per unit
2. Decoration & Packaging
By specific job
Direct cost per unit
3. Support (sanitation, warehouse, or other)
As "Support labor"
Based on weight or labor hrs
Supplies (eg. Spices, spoons)
1. Production (incl. mix, pour, bake, freeze)
By Operation
"Production supplies"
Based on production hours
2. Packaging (incl. decorating)...