The FSOJ Company Undertakes the Following Activities in Its Production

question 37

Multiple Choice

The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 20x2: Harvest apples $25,000
Prepare apples for processing 20,000
Extract juice from apples 18,000
Process juice into apple juice concentrate,
Apple juice or apple cider 30,000
Package completed products 9,000
Processing the juice into 3 final products involves the use of 2 machines, each of which incurred amortization costs of $15,000 for the first half of 20x2. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce apple juice for the next 2 weeks. Finally, workers set up the same machines to produce apple cider during the last week of each month.
During the first half of 20x2, 20% of the apples harvested were turned into apple juice concentrate, 50% were processed into apple juice, and 30% became apple cider. The relative sales values of each product were: 75% for apple juice, 20% for apple juice concentrate, and 5% for apple cider. The apple juice concentrate operation takes up 40% of FSOJ's total factory space. Regular apple juice and apple cider occupy 35% and 25%, respectively.
Assume processing costs are allocated on the basis of number of machine setups. How much processing cost will be allocated to each product line?

• A)$5,000 to each product line
• B)$7,500 each to apple juice concentrate and apple cider, and $15,000 to apple juice
• C)$10,000 to each product line
• D)None of the above

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Definitions:

Retail Life Cycle

Retail Life Cycle is a concept describing the stages of growth and decline that retail formats or individual retail businesses experience over time.

Growth And Decline

Phases in the lifecycle of a business, product, or industry where they experience expansion and contraction in size, revenue, or market share.

Retail Outlets

Physical stores or points of sale where consumers can purchase goods or services.

Retail Life Cycle

The retail life cycle refers to the process of growth and decline that retail outlets experience, similar to the life cycle of a product, including the stages of introduction, growth, maturity, and decline.