In 2016 mutt butter executed several production runs and


Problem - Mutt Butter, is an emerging company that manufactures and sells peanut butter treats for dogs. Mutt Butter includes two ingredients: peanut butter, and added nutrient powder. The ratio of Peanut Butter to nutrient powder if 2:1. To make Mutt Butter, the ingredients are mixed in a food processor. Mutt Butter is packaged in 1.5 oz single-serve cups. Julia is the chef of Mutt Butter and her sole role is to make the Mutt Butter. Mutt Butter is made in a commercial kitchen that Mutt Butter rents for a contracted 25 days a year at rate of $3,750 per year. That rent includes the utilities and use of the food processor and packaging equipment. The kitchen facility will also store any packaged Mutt Butter and ingredients for free (up to 5,000 1.5 oz cups). Mutt Butter did one production run in 2015. The Ending Balance of inventory at the end of the run was as follows:

Item

Ending Amount

Ending Balance ($)

Peanut Butter

200 oz.

$200

Nutrient Powder

400 oz.

$500

1.5 Oz Cups (with lids)

500

$50

Finished Mutt Butter (in cups)

50 x 1.5 oz. Servings

$182

Mutt Butter in Process

150 x 1.5 oz. Servings

$546

In 2016, Mutt Butter executed several production runs and sold 2,500 units (3,750 oz.) of Mutt Butter. The net revenue from the sales was $12,500. During 2016, Mutt Butter incurred the following expenses:

Item

Expense ($)

Wages to Julia for Production

$2,000

Rent for the Kitchen

$3,750

Peanut Butter

$3,400

Nutrient Powder

$1,875

1.5 oz. Cups (with lids)

$350

Delivery Expenses (Shipping)

$500

Advertising Expenses

$250

Other General and Administrative Expenses

$200

The ending balance at the end of 2016 was as follows:

Item

Ending Amount

Ending Balance ($)

Peanut Butter

600 oz.

$600

Nutrient Powder

400 oz.

$500

1.5 Oz Cups (with lids)

1,000

$100

Finished Mutt Butter (in cups)

550 x 1.5 oz. Servings

$2,003

Mutt Butter in Process

150 x 1.5 oz. Servings

$546

Required - What is the average cost of goods manufactured per unit in 2016?

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Accounting Basics: In 2016 mutt butter executed several production runs and
Reference No:- TGS02559412

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