Required information Problem 17-5A Pricing analysis with ABC and a plantwide overhead rate LO A1, A2, P1, P3 [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 1,300 1,300 1,000 Department 2 Machine calibration Labeling Defects Overhead cost $ 4,900 10,700 112,900 $ 128,500 $ 270,000 14,000 11,000 $ $ 295,000 $ 94,000 26,000 69,000 $ 189,000 Production runs Cases of output Cases of output 600 125,000 125,000 Support Recipe formulation Heat, lights, and water Materials handling Focus groups Machine hours Container types 50 1,300 12 Additional production information about its two product lines follows. Units produced Batches Machine hours Focus groups Container types Production runs Extra Fine 24,000 cases 240 batches 450 MH 25 groups 9 containers 240 runs Family Style 101,000 cases 760 batches 850 MH 25 groups 3 containers 360 runs Problem 17-5A Parts 1, 2 & 3 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 $7 per case of Extra Fine and $4 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $16 per case and the market price of Family Style Salsa is $8 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. Reg 1 Reg 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 per case rate Complete this question by entering your answers in the tabs below. Reg 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 $7 per case of Extra Fine and $4 per case of Family Style. (Round your intermediate calculations and final answers to 2 decimal places.) Total cost per unit unit Extra Fine Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Req 3B If the market price of Extra Fine Salsa is $16 per case and the market price of Family Style Salsa is $8 per case, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.) Extra Fine Family Style Complete this question by entering your answers in the tabs below. Reg 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
