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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 Overhead cost Driver Quantity

Department $1$ Mixing $ $4,500$ Machine hours $1,500$

Cooking $11,250$ Machine hours $1,500$

Product testing $112,500$ Batches $600$

$ $128,250$

Department $2$ Machine calibration $ $250,000$ Production runs $400$

Labeling $12,000$ Cases of output $120,000$

Defects $6,000$ Cases of output $120,000$

$ $268,000$

Support Recipe formulation $ $90,000$ Focus groups $45$

Heat, lights, and water $27,000$ Machine hours $1,500$

Materials handling $65,000$ Container types $8$

$ $182,000$

Additional production information about its two product lines follows.

Extra Fine Family Style

Units produced $20,000$ cases $100,000$ cases

Batches $200$ batches $400$ batches

Machine hours $500$ MH $1,000$ MH

Focus groups $30$ groups $15$ groups

Container types $5$ containers $3$ containers

Production runs $200$ runs $200$ 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 $$6$ per case of Extra Fine and $$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?