Whimsical cookies designs and fun flavors

Sales consist of storefront sales at their three locations in downtown Stover Massachusetts and corporate sales from the factory. The bakery always produces its standard cookies for storefront sales but also will complete special s for weddings large parties and similar events.

Additionally Cookie Cookie has a number of contracts with local restaurants to supply cookies for the restaurant’s dessert menus. Wookie Cookies creations are in high demand and they are considering expanding into other cities. Production overview Naturally Wookie Cookies can’t reveal their recipes but they have provided some details on how the cookies are made.

Wookie Cookies has a main production facility that makes the four primary cookie bases. Wookie Cookies makes four different cookie bases (sugar chocolate peanut butter and gluten free). The four bases are mixed in large batches. The batches of dough are then packaged into large tubs. Each tub consists of enough dough to make approximately 12 dozen cookies.

The factory makes approximately 400 tubs of dough a month but it varies due to demand. Each month the factory uses 150 tubs of dough to process the corporate s. The remaining tubs are delivered to each of the three storefront sites by refrigerated truck. Restaurant Orders The corporate s are regular standing s from grocery stores and restaurants in town. The contracts are signed annually and the s do not change for the year.

However the sales are not evenly spread through the year as many request larger deliverers in October-December due to increased holiday demand. Employees in the bakery department of the factory add additional mix-ins such as chocolate chips fudge candy pieces marshmallows to the dough before baking. The industrial ovens in the baking department uses large industrial ovens to bake the cookies. They are then sent into a blast chiller to cool.

Once the cookies cool they are packaged to be delivered. The packaging can take some time as the correct amount of cookies must be packaged and labeled for each of the corporate s. Store Front Sales The remaining dough tubs are delivered to each of the three storefront sites by refrigerated truck. Once the dough reaches the three bakeries the bakers add mix-ins to create a variety of cookie including additional flavorings chocolate chips nuts candies and more depending on the production schedule and any special s.

Next the cookies are placed on trays for baking. The bakery ovens fit 4 trays that each hold 12 cookies at time. After they’ve cooled for an hour the cookies are decorated. After the decorations dry the cookies are packaged and labeled and placed on pallets. It takes about a week to complete a specialty cookie and the plant uses just-in-time production methods to ensure freshness. Each bakery has their own production schedule determined by the Store Manager to meet local customer demand and fulfill any special s.

Factory Information Since contaminated food would lead to a visit by the Health Department (and possibly shutting down the factory) there are at least three sanitation workers on duty at all times in the factory. Generally there are 2 warehouse workers on duty to handle the shipping receiving and storage of raw materials and finished product. The plant typically runs two shifts per day with two production supervisors assigned to each shift.

For each of the four cookie bases the process is virtually the same regardless of the flavors or ingredients. The factory currently has capacity to do $1.8 million in total sales per year but with additional investments in ovens mixers and workstations (for about $250000) it could increase to $2.5 million. Reports The mangers at Wookie Cookies are skilled at determining the cost of ingredients but when it comes to labor and the overhead of each product line they’re not sure where to start.

At the moment Wookie Cookies allocates the same amount of overhead costs to every output unit. They believe that labor and overhead costs vary greatly between the corporate and storefront sales. And since the company does not currently track labor hours by product management has no idea of labor cost or profitability by product line.

A digital biometric time clock keeps track of hours for the factory employees but management is open to asking shift workers to track their hours by job or batch. Employees at the storefront locations use paper timecards. Your team’s assignment The managers at Wookie Cookies have asked for help determining a product costing system Wookie Cookies can use for pricing decisions profitability analysis financial planning and helping managers understand the business. Table 1 provides selected actual cost and revenue data for December 2021.

Additional information about costs can be found in the Notes to Selected Financial Data. Notes to Selected Financial Data Raw Materials: Includes main ingredients flavor additives and mix-ins. Main ingredients are relatively higher cost items such as flour white sugar brown sugar eggs and butter. Flavor additives are relatively low-dollar cost items and a small part of the weight of the pie such as spices salt and certain oils that don’t always appear on the package label. Mix-ins consist of nuts chocolate chips marshmallows and similar items.

Factory labor: The cost amount consists of 22% supervisory salaries and taxes and the rest hourly workers. Bakery labor workers are organized into four categories: production line (mixing filling and baking) packaging sanitation and warehouse (all included as part of cost of goods sold). Bakery labor: The cost amount consists of 54% supervisory salaries and taxes and the rest hourly workers. Bakery labor workers are primarily responsible for selling tasks at the local bakeries.

Administration Salaries: Includes taxes and benefits for the Vice President of Operations the Controller Human Resources Manager and two administrative support people. Supplies: Includes supplies relating to production packaging and decorating sanitation and warehouse (think: adhesive pastry bags spatulas scrapers icing pens gloves and so on). Freight & Shipping-Out: The costs of shipping finished products to customer locations. This does not include delivering dough tubs to the bakery locations.

Utilities Electricity: Approximately 10% for administrative office and the remainder for the factory. The factory portion varies somewhat with production volume. Utilities Gas (ovens): Approximately 5% for administrative office and the remainder for the factory. The factory portion varies somewhat with production volume. Your firm has been invited to provide a proposal. In no more than 1000 words write an executive summary addressing the following question: 1. What information does Wookie Cookies need? Before recommending a cost system it is helpful to understand a company’s information needs. Based on case information discuss the types of cost information Wookie Cookies’ product costing system should be able to provide. Requirements: just answered in full detail | .doc file ‘