Cathy and Tom’s Specialty Ice Cream Company operates a small production facility for the local c

Cathy and Tom's Specialty Ice Cream Company operates a small production facility for the local community. The facility has the capacity to make 19,200 gallons of the single flavor, GUI Chewy, annually. The plant has only two customers, Chuck's Gas & Go and Marcee's Drive & Chew DriveThru. Annual orders for Chuck's total 9,600 gallons and annual orders for Marcee's total 4,800 gallons. Variable manufacturing costs are $1.20 per gallon, and annual fixed manufacturing costs are $28,800.

The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck's orders 4,800 gallons in the summer and 4,800 gallons in the winter. Marcee's is closed in the winter and orders all 4,800 gallons in the summer.

In discussing their business, Cathy and Tom realize that there are really three seasons instead of two, the third being the fall and spring (as a combined season). Each of the three seasons lasts exactly four months. They also know that Marcee's opens in mid-spring and closes in mid-fall.

Cathy and Tom check the order patterns and see the following demand (in gallons) in each of the three seasons: Winter Fall and Spring Summer Total Chuck's 3,200 3,200 3,200 9,600 Marcee's 0 1,600 3,200 4,800 Total 3,200 4,800 6,400 14,400

Required:

Design the cost system for Cathy and Tom showing the capacity costs and capacity in each season. (Round “Fixed cost” and “Variable cost” to 2 decimal places.)

 

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