Problem 4-5A Sara's Salsa Company produces its condiments in two types: Extra Fine for restaurant customers and Pricing analysis with ABC Family Style for home use. Salsa is prepared in department 1 and packaged in department 2. The activi- and a plantwide overhead ties, overhead costs, and drivers associated with these two manufacturing processes and the company's rate production support activities follow. A1 A2 P1 P3 Overhead Cost Driver Machine hours Machine hours Process Activity 1,500 1,500 600 Department 1 $ 4,500 Mixing Cooking Product testing 11,250 112500 Batches $128,250 $250,000 12,000 Production runs 400 Machine calibration Labeling Defects Department 2 Cases of output 120,000 6,000 Cases of output 120,000 $268,000 90,000Focus groups 27,000 65.000 Container types Support Recipe formulation Heat, lights, and water Materials handling 45 1,500 Machine hours $182,000 Aditional production information about its two product lines follows. Extra Fine Family Style Batches Machine hours....500 MH Focus groups30 groups 100,000 cases 400 batches 1,000 MH 15 groups 3 containers 200 runs 200 batches Production runs200 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 g the plantwide overhead rate, determine the total cost per case for the two products if the direct Check (2)s r case Extra Fine, $10.82, Family materials and direct labor cost is S6 per case of Extra Fine and $5 per case of Family Style 3. If the market price of Extra Fine Salsa is $18 per case and the market price of Family Style Salsa is $9 Style, $9 82 4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materi- 5. If the market price is $18 per case of Extra Fine and $9 per case of Family Style, determine the gross Style, $79 6. Would your pricing analysis be improved if the company used departmental rates based on machine per case, determine the gross profit per case for each product. What might management conclude about each product line? als cost is S6 per case of Extra Fine and $5 per case of Family Style profit per case for each product. How should management interpret the market prices given your com- (4) Cost per case Extra Fine, $20.02, Family putations? ours in department 1 and number of cases in department 2 instead of ABC? Explain