Question
Required information [The following information applies to the questions displayed below.] Saras Salsa Company produces its condiments in two types: Extra Fine for restaurant customers
Required information
[The following information applies to the questions displayed below.] Saras 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 companys production support activities follow.
Process | Activity | Overhead cost | Driver | Quantity | ||
Department 1 | Mixing | $ | 5,700 | Machine hours | 2,100 | |
Cooking | 11,100 | Machine hours | 2,100 | |||
Product testing | 113,700 | Batches | 750 | |||
$ | 130,500 | |||||
Department 2 | Machine calibration | $ | 310,000 | Production runs | 500 | |
Labeling | 18,000 | Cases of output | 120,000 | |||
Defects | 6,000 | Cases of output | 120,000 | |||
$ | 334,000 | |||||
Support | Recipe formulation | $ | 81,000 | Focus groups | 50 | |
Heat, lights, and water | 42,000 | Machine hours | 2,100 | |||
Materials handling | 77,000 | Container types | 7 | |||
$ | 200,000 | |||||
Additional production information about its two product lines follows.
Extra Fine | Family Style | |||
Units produced | 32,000 | cases | 88,000 | cases |
Batches | 320 | batches | 430 | batches |
Machine hours | 850 | MH | 1,250 | MH |
Focus groups | 40 | groups | 10 | groups |
Container types | 4 | containers | 3 | containers |
Production runs | 230 | runs | 270 | runs |
4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $8 per case of Extra Fine and $7 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 Family Style Activity Drivers Overhead Cost Activity Drivers Activity Rate Overhead assigned Activity Drivers Overhead assigned Activity Mixing & Cooking Product testing Machine calibration Labeling & Defects Recipe formulation Heat, light and water Material handling Extra fine Family Style 5. If the market price is $17 per case of Extra Fine and $12 per case of Family Style, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.) Extra Fine Family Style
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started