ANSWERS Group Activity _1 Chapter 18 and 22

ANSWERS Group Activity _1 Chapter 18 and 22 - King Corn,...

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King Corn, Inc. manufactures gift cards, drink cups and plastic containers from specially processed corn that the company grows in nearby fields. 1) A list of some of the company’s costs are below; identify each cost item as either Direct Materials (DM), Direct Labor (DL), Factory Overhead (OH) or Period Cost (PC) and then as either a Variable Cost (VC) or Fixed Cost (FC). DM, DL, VC Item OH or PC or FC Cost of corn seeds DM VC Rent for farming equipment OH FC Cost of shipping materials for drink cups PC VC Cost of fertilizer for corn DM or OH VC Rent on factory equipment OH FC Wages for factory workers DL VC Wages for factory cleaning crew OH VC Salaries for administrative personnel PC FC Fuel for delivery vehicles PC VC Production additives (e.g. enzymes and yeast) DM VC 2) If drought conditions were affecting the area, how would that impact the company? What course of action would you recommend the company take? Explain your answer. Several different answers are possible; here is an example answer: The company’s farming costs would increase (i.e. cost of water and irrigation) which would increase the company’s overhead costs; otherwise, the company may be forced to
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ANSWERS Group Activity _1 Chapter 18 and 22 - King Corn,...

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