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This question was created from BACKGROUND two production departments, the Crushing and Fermenting de.docx


REQUIREMENTS: 1. Production Report Analysis: Prepare
production reports under the weighted average as well as the
FIFO method. What is the cost per bottle under each method?
What is considered as normal and abnormal spoilage,
respectively in the wine making process? How are the costs
associated with normal and abnormal spoilage treated? Is it
appropriate to ignore the cost of normal spoilage because all
spoilage is normal? 2. Decision Analysis: Myka would like to
maintain a 50% gross profit to cover AVS's administrative
expenses of US$125,000 and target a 15% net profit. What
should the target cost per case be in order to achieve these
goals? Does the current production report in AVS help
achieve these targets? Does your final production report show
costs per case that will lead to achieving these targets? 3.
Ethical Implications: What are the possible reasons for
managers to state that all spoilage is normal? What additional
information would you request from managers to confirm that there is no abnormal spoilage and that all spoilage is normal?

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