Question

In: Accounting

Danone produces different kind of milkshakes, the production process starts with workers mixing milk with different...

Danone produces different kind of milkshakes, the production process starts with workers mixing milk with different kind of fruits, fruits flavors and other ingredients in a secret recipe. The company enhance the combined mixture with natural flavors. Finally, the company puts the mixture in special pots.

Danone incurs the following costs:

Sugar

$30

Wages of workers who do the mixture

$6,400

Marketing department salaries

$730

Delivery truck drivers’ wages

$150

Milk

$5,000

Fruits flavorings

$780

Lift truck operators’ salaries

$1,120

Payment for new recipe

$750

Salaries of factory cleaners

$750

Yoghurt pots

$1,300

Sales commissions            

$250

Customers services

$210

Depreciation on delivery trucks

$230

Depreciation on equipment

$2,700

Natural fruits flavors

$350

Insurance on plant building

$250

Fruits

$16,000

Instructions

  1. Classify each of the listed costs into three subcategories: direct materials, direct labor, manufacturing overhead:

Direct materials

Direct

labor

Manufacturing overhead

Sugar

Wages of workers who do the mixture

Marketing department salaries

Delivery truck drivers’ wages

Milk

Fruits flavorings

Lift truck operators’ salaries

Payment for new recipe

Salaries of factory cleaners

Yoghurt pots

Sales commissions            

Customers services

Depreciation on delivery trucks

Depreciation on equipment

Natural fruits flavors

Insurance on plant building

Fruits

  1. How much the total cost for each value chain category?

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  1. If Danone will produce 20 000 pots of milkshake this year, how much the average cost per pot?

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Note: Answers Should be in Word Version Format Please

Solutions

Expert Solution

Answer : Classification of costs

(Amount in $ )

Expense direct material direct labour manufacturing overhead other than production cost
Sugar 30
Wages of workers who do mixture 6400
Marketing department salaries 730
Delivery truck driver wages 150
Milk 5000
Fruit flavoring 780
Lift truck operators salaries 1120
Payment for new recipe 750
Salaries for factory cleaner 750
Yoghurt pots 1300
Sales commission 250
Customers services 210
Depreciation on delivery truck 230
Depreciation on equipment 2700
Natural fruit flavor 350
Insurance on plant building 250
Fruits 16000
Total 22160 6400 6870 1570

Total cost for each category

Direct Material $ 22160

Direct labour $ 6400

Manufacturing overhead $ 6870

And other than production cost $ 1570

If Danone produces 20000 pots in current year then average production cost per pot will be :

22160 + 6400 + 6870 = 35430

Cost per pot = 35430/ 20000

= $ 1.7715 per pot

ekkarill92 answered 3 years ago
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