Posted: July 6th, 2016

What is the operation cost for the company?

Fruit Snacks Corp Inc. makes lunchbox style fruit snacks. The owner of the company is setting up a standard cost system, and she 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 fruit per dozen bags 0.95 kg
Allowance for waste, kilograms of fruit per dozen bags 0.06 kg
Allowance for rejects, kilograms of fruit per dozen bags 0.04
Purchase price, fruit $7.50/kg
Purchase discount 4% of purchase price
Shipping cost from supplier $0.30/kg
Receiving and handling cost $0.10/kg
The statement of changes in retained earning for the year shows:
a) the retained earnings balance at the beginning of the year
b) amounts received from the sale of additional common stock during the year
c) extraordinary gains or losses during the year
d) the effect of a stock split during the year.