Student 10:26 AM a wtietz.files.wordpress.com Would Yogurt Vi use job costing or
ID: 2329852 • Letter: S
Question
Student 10:26 AM a wtietz.files.wordpress.com Would Yogurt Vi use job costing or process costing in calculating the cost of a customer's cup of frozen yogurt and toppings? Yogurt Vi (pronounced vee) is a frozen yogurt restaurant with several locations in Ohio. Customers will select the flavor of frozen yogurt they want and fill their cup from the self-serve machine with the desired amount of the frozen yogurt. Next the customer will proceed to the toppings bar, where they can select from a large variety of toppings including strawberries, kiwis, gummy bears, chocolate chips, crushed Oreos, M&M candies, sprinkles, salted caramels, and many other toppings. Once the customer has finished adding toppings, the customer then proceeds to the cash register where the cup of frozen yogurt and toppings is weighed. The customer is charged a flat fee of S0.48 per ounce. Questions 1. Do you think that Yogurt Vi pays the same amount to its suppliers for each of the toppings? For example, is it probable that fresh strawberries cost the exact same amount as M&M candies? Do you think the toppings would cost the same amount as the frozen yogurt mix that is put into the soft-serve machines? 2. From a technical viewpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer's order? Explain. 3. From a practical standpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer's order? Explain. Source: Wendy Tietz, PhD, CPA, CMA, AccountingintheHeadlines.com This work is licensed under a Creative Commons Attribution-NonCommercial 3.o Unported License.Explanation / Answer
1. I do not think Yogurt Vi pays the same amount to its suppliers for each of the toppings. Cost of different materials are different.
I do not think that toppings would cost the same as frozen yoghurt mix. The ingredients of toppings and frozen youghurt are different. So their cost will also be different.
2. From a technical standpoint, Yoghut Vi should use job costing for each customer order because the materials like frozen yoghurt flavour and toppings for each customer order will be different. So cost for each order should be based on the flavour and the toppings used.
3. From a practical standpoint, Yoghurt vi would use process costing since the amount of topping and frozen yoghurt is not known separately as the toppings and yoghurt are weighed together at cash register. Also the flavour and topping selected by the customer is not tracked. So the costs of diffferent flavours and toppings cannot be assigned specifically to each customer order.