Reference no: EM132241198
Costs are to be calculated for:
Ingredients
Packaging
Direct Labor
Overhead (indirect labor, supervision, maintenance, NRG, depreciation, admin & general, employee benefits, insurance, taxes)
Annual sales forecast = 12,500,000 cases, each case containing 12 boxes; each box contains 10.5 ounces, net weight.
Two (2) production lines.
Production schedule = two (2) eight (8) hour shifts; 16 production hours per day. Five (5) days per week; M-F. No overtime schedules.
Production days: 260
Ingredients per 10.5 ounce box:
Wheat Flour: $0.578
Sugar: $0.121
Vitamins: $0.050
Coloring: $0.015
Packaging costs per boxes:
Inner liner: $0.016
Decorated box: $0.098
Corrugated shipping case = $0.080
Direct Labor per shift required to produce Rootie Tootie Frooties:
1 kitchen lift truck driver
2 ingredient mixers
2 drier operators
4 flake inspectors
2 box erectors
2 caser operators
1 palletizer operator
1 take-away driver
Average Labor Rate per Hour = $17.85
Overhead per case of 12 boxes = $1.675
Gross Margin Target = 50% of sales revenues
You are to calculate:
How many cases per minute must be produced to meet the annual sales forecast? Disregard any inventory; assume JIT.
Total Cost Per Case of 12 boxes (C):
Continued
Selling Price per case to yield a 50% profit margin (SP)
Selling price per ounce
Pre-tax profit margin per case (SP – C)
Pre-tax profit margin $ per year