Scrap/Rework HotPie's Bakery's #1 selling product is the Walder Pie. Use this financial information to answer the question. Sales and Cost Information for Walder Pies Financial Information at 80% capacity Units and Per Unit Costs Dollars Sales 10,000 50,000 Direct Materials 1.00 10,000 Direct Labor 1.60 16,000 Variable OH 0.50 5,000 Fixed OH 0.75 7,500 HotPie has discovered that 10% of the time, the chef forgets to brown the butter, making the Walder Pies defective. They can sell the pies to Ramsey Bolton to feed to his dogs for $2/pie. Alternatively, they can rework the pies for an additional per unit cost of $1 in direct materials, $2 in direct labor and $0.10 in variable overhead. the reworked pies can be sold for $5/pie. How much will HotPie make if they sell the defective pies to Ramsey Bolton? Group of answer choices 1,000 1,250 5,000 2,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Scrap/Rework
HotPie's Bakery's #1 selling product is the Walder Pie. Use this financial information to answer the question.
Sales and Cost Information for Walder Pies
| Financial Information at 80% capacity | Units and Per Unit Costs | Dollars |
|---|---|---|
| Sales | 10,000 | 50,000 |
| Direct Materials | 1.00 | 10,000 |
| Direct Labor | 1.60 | 16,000 |
| Variable OH | 0.50 | 5,000 |
| Fixed OH | 0.75 | 7,500 |
HotPie has discovered that 10% of the time, the chef forgets to brown the butter, making the Walder Pies defective. They can sell the pies to Ramsey Bolton to feed to his dogs for $2/pie. Alternatively, they can rework the pies for an additional per unit cost of $1 in direct materials, $2 in direct labor and $0.10 in variable overhead. the reworked pies can be sold for $5/pie.
How much will HotPie make if they sell the defective pies to Ramsey Bolton?
Group of answer choices
1,000
1,250
5,000
2,000
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