In: Accounting
Unit- and Batch-Level Cost Drivers
KC, a fast-food restaurant, serves fried chicken, fried fish, and
French fries. The managers have estimated the costs of a batch of
fried chicken for KC's all-you-can-eat Friday Fried Fiesta. Each
batch must be 100 pieces. The chicken is precut by the chain
headquarters and sent to the stores in 10-piece bags. Each bag
costs $2. Preparing a batch of 100 pieces of chicken with KC's
special coating takes one employee two hours. The current wage rate
is $8 per hour. Another cost driver is the cost of putting fresh
oil into the fryers. New oil, costing $3, is used for each
batch.
Round answers to two decimal places, when applicable.
(a) Determine the cost of preparing one batch of 100
pieces.
$Answer
(b) If management projects that it will sell 300 pieces of fried
chicken, determine the total batch and unit costs.
Batch cost $Answer
Unit cost $Answer
(c) If management estimates the sales to be 450 pieces, determine
the total costs.
$Answer
(d) How much will the batch costs increase if the government raises
the minimum wage to $10 per hour?
$Answer
(e) If management decided to reduce the number of pieces in a batch
to 50, determine the cost of preparing 450 pieces. Assume that the
batch would take half as long to prepare, and management wants to
replace the oil after 50 pieces are cooked.
$Answer