Three granddaughters of the original founder of Smarties now run the company and have been working to improve efficiency. Their chief mechanic designed a faster candy press and a new wrapper machine. Previously, 125 Smarties rolls could be wrapped per minute; now 200 rolls can be wrapped per minute.
Smarties are produced 24 hours a day. (You can see a short video clip about Smarties and the production process at http://www.fyi.tv/shows/food-factory-usa/videos/these-women-have-business-smarties .)
The Smarties Candy Company has its one main product that is likely to account for most of its sales, but recently it has introduced Smarties ‘n creme, which are tablets that are about the size of a quarter and have a flavor burst that is half fruit (strawberry, blueberry, raspberry, peach, or orange) and half cream (dairy-free.)
- Give an example of each of the following types of costs at the Smarties Candy Company:
- Direct material
- Direct labor
- Manufacturing overhead
- Selling and administrative expense
- Assume that only Smarties candies are made in the New Jersey plant. Do you think the Smarties Candy Company is likely to use job order costing or process costing? Explain.
- If the New Jersey plant begins to produce Smarties ‘n creme in addition to Smarties candy rolls, would this change be likely to whether the company uses job order costing or process costing? Why or why not?