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Question - Scenario - Cookie Cutters Inc. bakes four types of cookies. All cookies use the same basic dough. The dough is prepared by the Dough Department. The cookies then have a variety of ingredients added to them to make them distinct types. This is done by the Finishing Department.
In the past month, the Dough Department had the following production and costs:
Direct material $800
Direct labour 1,200
Overhead 400
Dough for 3,000 dozen cookies was produced.
In the past month, the Finishing Department had the following costs related to chocolate chip cookies:
Direct material $300
Direct labour 500
Overhead 250
1,000 dozen chocolate chip cookies were produced.
The CEO of the company wants to determine the cost of one dozen chocolate chip cookies.
Which costing method is recommended for this scenario. Explain why you recommend the method.
What is the cost of a dozen chocolate chip cookies?
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