Fruit Snacks Corp. Inc. makes lunchbox style fruit snacks. The owner of the comp
ID: 2385616 • Letter: F
Question
Fruit Snacks Corp. Inc. makes lunchbox style fruit snacks. The owner of the company is setting up a standard cost system, and she has collected the following data for one of the company's products-fruit chews.The data below pertain only to the fruits used in the product
Material requirements, kilograms of fruits per dozen bags 0.95 kilograms
Allowance for waste, kilograms of fruits per dozen bags 0.06 kilograms
Allowance for rejects, kilograms of fruits per dozen bags 0.04 kilograms
Purchase price, fruit $7.50 per kilogram
Purchase discount 4% of purchase price
Shipping cost from the supplier $0.30 per kilogram
Receiving and handling cost $0.l0 per kilogram
a. Determine the standard price of a kilogram of fruits. Show computations
b. Determine the quantity of fruits for one dozen bags. Show computations
Explanation / Answer
1. Net total kg fruit required to be present per 12 bags = 0.95 kg per 12 bags 2. Add allowance for waste = 0.95 + 0.06 = 1.01 kg per 12 bags 3. Add allowance for rejects = 1.01 + 0.04 = 1.05 kgs per 12 bags (required to start processing with) Answer 2 = Standard quantity of fruits per dozen bags to start processing = 1.05 kg per 12 bags Doing 1st part of question second:- 4. Cost of fruit for 12 bags of fruit = 1.05 kgs x $7.50/kg = $7.875 per 12 bags 5. Less 4% discount of purchase price = $7.875 - ($7.875 x 4/100) = $7.875 - $0.315 = $7.56 per 1.05 kgs for 12 bags fruit 6. Add Net cost of shipping per 12 bags @ rate of $0.30 per kg fruit purchased = 1.05 kg x 0.30 = $0.315 + $7.56 = $7.875 7. Add Cost of Handling etc @ $0.10/kg = 1.05 x $0.10 = $0.105 + $7.875 = $7.98 per 1.05 kgs for 12 bags fruit $7.98 = real cost per 1.05 kgs of purchased chew fruit used to start processing. 8. Therefore cost of 1 kg of fruit = $7.98/1.05 kgs = $7.60 per kg Answer 1 = Standard price per kg of fruits = $7.60
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