Question 12
Required information [The following information applies to the questions displayed below.] 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 Driver Machine hours Machine hours Batches Quantity 1,700 1,700 550 Department 2 Machine calibration Labeling Defects Overhead cost $ 5,300 10,000 113,300 $ 128,600 $ 290,000 16,000 10,000 $316,000 $ 98,000 34,000 73,000 $ 205,000 Production runs Cases of output Cases of output 800 130,000 130,000 Support Recipe formulation Heat, lights, and water Materials handling Focus groups Machine hours Container types 50 1,700 10 Additional production information about its two product lines follows. Units produced Batches Machine hours Focus groups Container types Production runs Extra Fine 28,000 cases 280 batches 650 MH 20 groups 7 containers 280 runs Family Style 102,000 cases 270 batches 1,050 MH 30 groups 3 containers 520 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 $4 per case of Extra Fine and $3 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $13 per case and the market price of Family Style Salsa is $7 per case, determine the gross profit per case for each product. 3.b. What might management conclude about the Family Style Salsa product line? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B 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. (Round your intermediate calculations and final answers to 2 decimal places.) Plantwide overhead rate per case Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Using the plantwide overhead rate, determine the total cost per case for the two products if the direct materials and direct labor cost is $4 per case of Extra Fine and $3 per case of Family Style. (Round your intermediate calculations and final answers to 2 decimal places.) Total cost per unit Extra Fine unit Family Style unit Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B What might management conclude about the Family Style Salsa product line? Conclude about the Family Style Salsa product line
