Question

Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 18,000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 9,000 gallons and annual orders for Marcee's total 4,500 gallons. Variable manufacturing costs are $.60 per gallon, and annual fixed manufacturing costs are $27,000.

07 Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 18.000 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chucks Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 9,000 gallons and annual orders for Marcee's total 4.500 gallons. Variable manufacturing costs are 5.60 per gallon, and annual fixed manufacturing costs are $27.000. 10 The Ice cream business has two seasons, summer and winter Each season lasts exactly six months. Chuck's orders 4,500 gallons In the summer and 4.500 gallons in the winter. Marcee's is closed in the winter and orders all 4.500 gallons in the summer. in discussing their business, Cathy and Tom realize that there are really three seasons Instead of two, the third being the fall and spring (as a combined season). Each of the three seasons lasts exactly four months. They also know that Marcee's opens in mid-spring and closes in mid-fall Cathy and Tom check the order patterns and see the following demand (in gallons) in each of the three seasons: Chuck's Marcee's Total Winter 3.ee e 3.000 Fall and Spring 3,000 1.580 4.580 -200 Summer 3,000 3.ee 6.00 Total 2.ee 4.5e 13,500 Required: Design the cost system for Cathy and Tom showing the capacity costs and capacity in each season. (Round "Fixed cost" and "Variable cost to 2 decimal places.) Answer is complete but not entirely correct. IS IS Capacity Coate Toll Unused Used Charge for unused Total capacity costs Production (galors) Fixed cost per gallon) Variable cost (per gallon) Total product cost per gallon) Winter Fall/Spring Summer 9,000S 9,000S 9,000 4.500 6.750 ov 4,500 IS 2.250 IS 9,000 0 4,500 9,000 4,500 IS 6.750 18.000 3,000 4.500 6.000 1.50 1.500 3.00 0.60 0.60 0.60 2.10 IS 2.10 IS 3.60 Is IS