Mercia Chocolates produces gourmet chocolate products with nopreservatives. Any production must be sold within a few days, soproducing for inventory is not an option. Mercia’s single plant hasthe capacity to make 99,000 packages of chocolate annually.Currently, Mercia sells to only two customers: Vern’s Chocolates (aspecialty candy store chain) and Mega Stores (a chain of departmentstores). Vern’s orders 54,000 packages and Mega Stores orders24,000 packages annually. Variable manufacturing costs are $28 perpackage, and annual fixed manufacturing costs are $561,000. Thegourmet chocolate business has two seasons, holidays andnon-holidays. The holiday season lasts exactly four months and thenon-holiday season lasts eight months. Vern’s orders the sameamount each month, so Vern’s orders 20,400 packages during theholidays and 44,400 packages in the non-holiday season. Mega Storesonly carries Mercia’s chocolates during the holidays. Required: a.Calculate the product cost for each season with excess capacitycosts assigned to season in which it is incurred. (Round yourintermediate calculations and final answers to 2 decimalplaces.)
Non Holiday ____Per Package Holiday ____Per Package
b. Calculate the product cost for each season with excesscapacity costs assigned to the season requiring it.(Round yourintermediate calculations and final answers to 2 decimalplaces.)
Non Holiday ____Per Package Holiday ____Per Package
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