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5. If the market price is $18 per case of Extra Fine and $12 per case of Family Style, determine the gross profit per case
5. If the market price is $18 per case of Extra Fine and $12 per case of Family Style, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.)
Sara's Salsa Company produces its condiments in two types: Extra Fine for restaurant customers and Family Style for home use. Salsa is prepared in department 1 and packaged in department 2. The activities, overhead costs, and drivers associated with these two manufacturing processes and the company's production support activities follow. Process Department 1 Activity Mixing Cooking Product testing Quantity 2,200 2,200 1,000 Department 2 Machine calibration Labeling Defects Overhead cost Driver $ 5,800 Machine hours 12.900 Machine hours 113,800 Batches $ 132,500 $315,000 Production runs 20,000 Cases of output 9,000 Cases of output $344,000 S2,000 Focus groups 33,000 Machine hours 79.000 Container types $ 193,000 500 145,000 145,000 Support Recipe formulation Heat, lights, and water Materials handling 2,200 Additional production information about its two product lines follows. Units produced Batches Machine hours Focus groups Container types Production runs Extra Fine 33,000 cases 330 batches 900 M 30 groups 6 containers 240 runs Family Style 112,000 cases 670 batches 1,300 MB 10 groups 2 containers 260 runs Required: 1. Using a plantwide overhead rate based on cases, compute the overhead cost that is assigned to each case of Extra Fine Salsa and each case of Family Style Salsa. 2. Using the plantwide overhead rate, determine the total cost per case for the two products if the direct materials and direct labor cost is $9 per case of Extra Fine and $8 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $18 per case and the market price of Family Style Salsa is $12 per case, determine the gross profit per case for each product. 3.b. What might management conclude about the Family Style Salsa product line? 4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $9 per case of Extra Fine and $8 per case of Family Style. (Round your intermediate calculations to 2 decimal places. Round "Activity Rate" and "Overhead cost per unit" answers to 2 decimal places.) Extra fine Activity Drivers Family Style Activity Drivers Activity Overhead Cost Activity Drivers Overhead assigned Activity Rate Overhead assigned Mixing & Cooking Product testing Machine calibration Labeling & Defects Recipe formulation Heat, light and water Material handling Extra fine Family Style
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