Allocating facility-level costs and a product elimination decision Adgar Corporation produces two types of juice that it packages in cases of 24 cans per case. Selected per case data for the two products for the last month follow.

Adgar allocates production overhead using activity-based costing but allocates monthly packaging expense, which amounted to $60,000 last month, to the two products equally.
Required
a. Compute the net profit for each product.
b. Assuming that the overhead allocation for the tomato juice includes $30,000 of facility-level costs, would you advise Adgar to eliminate thisproduct?

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Tomato Juice Orange Juice Production costs Direct material Direct labor Allocated overhead Total cases produced and sold Total sales revenue $1.50 $2.25 $2.25 $1.50 $2.25 25,000 $3.00 15,000 $210,000 $127,500