Tour #1 : Hershey's

Rating: ****

Company Overview: A manufacturer of chocolate from cocoa beans.

Managerial Accounting Topic(s): manufacturing technology, food processing

Web Site: www.hersheys.com

To Take the Tour: From the home page, select “Discover Hershey” then click on “Making the Chocolate.”

Question : In Chapter 11, we have discussed the use of flexible budgets and the analysis of overhead costs. After reviewing the tour of the processes involved in producing chocolate from cocoa beans, answer the following questions:

1. What types of specific factory overhead costs might the company incur?
2. If the company prepared a flexible budget, which specific types of costs might be variable? Fixed?
3. On what basis might factory overhead costs be applied to the products as they are produced?