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Unit- and Batch-Level Cost Drivers KC, a fast-food restaurant, serves fried chicken, fried fish, and French fries. The managers have estimated the costs of a batch of fried chicken for KC’s all-you-can-eat Friday Fried Fiesta. Each batch must be 100 pieces. The chicken is precut by the chain headquarters and sent to the stores in 10-piece bags. Each bag costs $3. Preparing a batch of 100 pieces of chicken with KC’s special coating takes one employee two hours. The current wage rate is $8 per hour. Another cost driver is the cost of putting fresh oil into the fryers. New oil, costing $3, is used for each batch. Round answers to two decimal places, when applicable. (a) Determine the cost of preparing one batch of 100 pieces $ 49 (b) If management projects that it will sell 300 pieces of fried chicken, determine the total batch and unit costs Batch cost $147 Unit cost $ 0.49 (c) If management estimates the sales to be 250 pieces, determine the total costs. $ 122 X (d) How much will the batch costs increase if the government raises the minimum wage to $10 per hour?
Expert Answer
The batch must be minimum of 100 chickens as mentioned in the details and hence even though the sale is going to 250 pieces, the management has to prepare 3 batches i.e. 300 pieces, Per Batch cost is 49 USD so 3 batch cost will be USD 147.
Clarification : Each Batch must be 100 pieces.
