Question

Yogurt Vi (pronounced vee) is a frozen yogurt restaurant with several locations in Ohio. Customers will select the flavor of frozen yogurt they want and fill their cup from the self-serve machine with the desired amount of the frozen yogurt. Next the customer will proceed to the toppings bar, where they can select from a large variety of toppings including strawberries, kiwis, gummy bears, chocolate chips, crushed Oreos, M&M candies, sprinkles, salted caramels, and many other toppings. Once the customer has finished adding toppings, the customer then proceeds to the cash register where the cup of frozen yogurt and toppings is weighed. The customer is charged a flat fee of $0.48 per ounce.

Questions 1: Do you think that Yogurt Vi pays the same amount to its suppliers for each of the toppings? For example, is it probable that fresh strawberries cost the exact same amount as M&M candies? Do you think the toppings would cost the same amount as the frozen yogurt mix that is put into the soft-serve machines?

Question 2: From a technical viewpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer’s order? Explain.

Question 3: From a practical standpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer’s order? Explain.

Answer 1

1. No. The cost charged by the suppliers for every topping would be different. Also, the cost of toppings would be different from the cost of the frozen yogurt mix that is put into the soft-serve machines.

2. Each customer’s order is different and unique and there is no standardized order as the frozen yogurt flavour chosen and the topping chosen may be different for every order. Hence, from a technical viewpoint, Yogurt Vi would use a job costing system instead of a process costing system since every customer order is a non-standardized job with a specific cost.

3. From a practical standpoint, Yogurt Vi would use the process costing system for calculating the cost of each customer’s order over the job costing system. This is because of the large number of customer orders and the maintaining of detailed information of every customer order would require tremendous clerical work and would be an expensive affair.