PEZ Candy Inc. produces the popular small candy that is dispensed in collectible flip-top dispensers. In the United States, PEZ candies are produced in a factory in Connecticut. Over 3 billion of the small brick-shaped candies are consumed in the U.S. each year. PEZ candy is made from sugar, fruit flavoring, coloring, and corn syrup; the ingredients are put under pressure to form the hard tablets. About 95% of a PEZ tablet is sugar. The Connecticut location also houses PEZ’s US headquarters and the PEZ Visitor Center. The Visitor Center offers birthday parties that include a staff member to host the party, goodie bags, pizza, soft drinks, and other options. When a family wants to have a birthday party, the family will work with PEZ staff to customize the birthday party.
1. Would PEZ Candy Inc. be more likely to use job costing or process costing for the manufacture of its PEZ candies? Why?
2. Give an example of each of the following types of costs that PEZ Candy Inc. would be likely to incur in the manufacture of its PEZ candies:
a. Direct material
b. Direct labor
c. Manufacturing overhead
i. Indirect materials
ii. Indirect labor
iii. Other manufacturing overhead
3. Would PEZ Candy Inc. be more likely to use job costing or process costing to calculate the cost of one particular birthday party hosted at the PEZ Visitor Center? Why?