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 Activity Department 1 Mixing Cooking Product testing Driver Machine hours Machine hours Batches Quantity 1,500 1,500 600 Department 2 Machine calibration Labeling Defects Overhead cost $ 4,500 11,250 112,500 $ 128, 250 $ 250,000 12,000 6,000 $ 268,000 $ 90,000 27,000 65,000 $ 182,000 Production runs Cases of output Cases of output 400 120,000 120,000 Support 45 Recipe formulation Heat, lights, and water Materials handling Focus groups Machine hours Container types 1,500 8 Additional production information about its two product lines follows. Units produced Batches Machine hours Focus groups Container types Production runs Extra Fine 20,000 cases 200 batches 500 MH 30 groups 5 containers 200 runs Family Style 100,000 cases 400 batches 1,000 MH 15 groups 3 containers 200 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 unit for the two products if the direct materials and direct labor cost is $6 per case of Extra Fine and $5 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 $9 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 Reg 2 Reg 3A Reg 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 final answer to 2 decimal places.) Plantwide overhead rate $ 4.29 per case Req 1 Reg 2 Req 3A Req 3B Using the plantwide overhead rate, determine the total cost per unit for the two products if the direct materials and direct labor cost is $6 per case of Extra Fine and $5 per case of Family Style. (Round your intermediate calculations and final answers to 2 decimal places.) Total cost per unit Extra Fine $ 11.29 unit Family Style $ 10.29 unit Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B If the market price of Extra Fine Salsa is $18 per case and the market price of Family Style Salsa is $9 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. Req 1 Reg 2 Req 3A Req 3B What might management conclude about the Family Style Salsa product line? 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 $6 per case of Extra Fine and $5 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 Family Style Activity Drivers Overhead Cost Activity Drivers Activity Rate Overhead assigned Activity Drivers Overhead assigned Mixing & Cooking Product testing Machine calibration Labeling & Defects Recipe formulation Heat, light and water Material handling Extra fine Family Style
