Marv and Vicki own and operate a vegetable canning plant. In recent years their business has grown tremendously and at any point in time they may have 30 to 35 different vegetables being processed. Also, during the peak summer months there are several thousand bushels of vegetables in some stage of being processed at any one time. With the company's growth during the past few years the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements. Although the accountant is doing exactly as instructed, Marv and Vicki are confused about the monthly operating costs. Although they process an average of 50,000 canned units a month, the monthly production report fluctuates wildly.
Required:
Explain how income can fluctuate when sales are relatively stable.

Question

Quizplus · Accepted Answer

The Answer of Marv and Vicki own and operate a vegetable canning plant. In recent years their business has grown tremendously and at any point in time they may have 30 to 35 different vegetables being processed. Also, during the peak summer months there are several thousand bushels of vegetables in some stage of being processed at any one time. With the company's growth during the past few years the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements. Although the accountant is doing exactly as instructed, Marv and Vicki are confused about the monthly operating costs. Although they process an average of 50,000 canned units a month, the monthly production report fluctuates wildly.
Required:
Explain how income can fluctuate when sales are relatively stable.

Marv and Vicki Own and Operate a Vegetable Canning Plant