Based on the information from the Blanchard Importing and Distributing Co., Inc.

Based on the information from the Blanchard Importing and Distributing Co., Inc. case study, let’s analyze the cost components for both setup costs (S) and variable costs (C).
Part 1: Setup Cost (S)
1. Blending Setup Cost:
Recommendation: Include and revise.
Reasoning: This cost varies for each item, reflecting the actual labor cost for blending during rectification. As it directly contributes to the preparation of different products, it is an essential part of setup costs but might need revision to reflect current labor rates or efficiencies.
2. Size Changeover Cost:
Recommendation: Include and unchanged.
Reasoning: This is a constant cost ($8.85) for all items, representing the labor cost to reset machines for different bottle sizes. Since it’s a standard cost across all items and essential for bottle size customization, it should be included without changes.
3. Label Changeover Cost:
Recommendation: Include and unchanged.
Reasoning: This cost is also constant ($11.78) for all items and covers the labor cost to reset the labeling machine. It’s an integral part of packaging and branding, thus should remain in the setup cost calculation.
4. Order Processing Cost:
Recommendation: Include and unchanged.
Reasoning: This is an average administrative labor cost ($51.43) for processing each order. It’s crucial for order management and logistics, and should be included as it is.
Part 2: Variable Cost (C)
1. Materials Cost:
Recommendation: Included.
Reasoning: This covers the cost of raw bulk, bottles, caps, and labels, which are direct costs of production.
2. Bottling Labor:
Recommendation: Included.
Reasoning: It’s a specific cost related to the bottling line labor, crucial for the production process.
3. Fixed Overhead Allocation:
Recommendation: Excluded.
Reasoning: Fixed overhead should not be part of the variable cost as it does not vary with the level of production or sales.
4. Variable Overhead:
Recommendation: Included.
Reasoning: It includes direct expenses associated with the production of each case and varies with production level.
5. Customs Duty:
Recommendation: Included.
Reasoning: This is a charge on imported spirits, varying with the alcoholic content, and directly impacts the cost of production for those specific items.
6. Federal Distilled Spirits Tax:
Recommendation: Included.
Reasoning: This tax applies to all spirits sold in the U.S. and varies with alcoholic content, making it a variable cost.
7. Federal Rectification Tax:
Recommendation: Included.
Reasoning: This tax applies to certain mixed beverages and varies with the alcoholic content of the item, fitting the criteria of a variable cost.
In summary, most components in the existing formulas for setup and variable costs are correctly classified and should be retained. For setup costs, only the blending setup cost might need revision to reflect current conditions. For variable costs, the fixed overhead allocation should be excluded as it does not vary with production levels.
You
Part 1. Fixed the setup cost per order, S
In Exhibit 2, Blanchard currently breaks down the setup cost per bottle run to be sum of four cost items:
S = (blending setup cost) + (size changeover cost) + (label changeover cost) + (order processing cost).
Please choose which item should be excluded, or included (and unchanged or revised) from this formula. Please discuss your recommendations for correcting this calculation and explain your reasoning.
Flag question: Question 2
Question 21 pts
The cost item attributable to “blending” should be ____ from the overall setup cost per order, S.
Group of answer choices
Excluded
Included and unchanged
Included and revised
Flag question: Question 3
Question 31 pts
The cost item attributable to “size changeover” should be ____ from the overall setup cost per order, S.
Group of answer choices
Excluded
Included and unchanged
Included and revised
Flag question: Question 4
Question 41 pts
The cost item attributable to “label changeover” should be ____ from the overall setup cost per order, S.
Group of answer choices
Excluded
Included and unchanged
Included and revised
Flag question: Question 5
Question 51 pts
The cost item attributable to “order processing” should be ____ from the overall setup cost per order, S.
Group of answer choices
Excluded
Included and unchanged
Included and revised
Flag question: Question 6
Question 65 pts
Please discuss your reason for your choices above. If you plan to “include and revised” an cost item, please discussed how you revise it.
Limit your response to 200 words.
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Flag question: Spacer
Part 2. Fixed the variable cost C per unit.
The company currently calculates the value of using the following formula in Exhibit 2:
C = (materials cost) + (bottling labor) + (fixed overhead allocation) + (variable overhead) + (customs duty) + (federal distilled spirits tax) + (federal rectification tax).
Please choose which item should be excluded or included in this formula. Please discuss your recommendations for correcting this calculation and explain your reason.
Flag question: Question 7
Question 70.5 pts
The cost item attributable to “materials cost” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 8
Question 80.5 pts
The cost item attributable to “bottling labor” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 9
Question 90.5 pts
The cost item attributable to “fixed overhead allocation” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 10
Question 100.5 pts
The cost item attributable to “variable overhead” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 11
Question 110.5 pts
The cost item attributable to “customs duty” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 12
Question 120.5 pts
The cost item attributable to “federal distilled spirits tax” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 13
Question 130.5 pts
The cost item attributable to “federal rectification tax” should be ____ from the overall variable cost, C.
Group of answer choices
Excluded
Included
Flag question: Question 14
Question 144 pts
Please discuss your reason for your choices above. Limit your response to 200 words.
p
Flag question: Question 15
Question 150 pts
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