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Sara's Salsa Company produces is condiments in two types Extra Fine for restaurant customers and Family Style for home use. Salsa is prepared in department
Sara's Salsa Company produces is 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. Additional production information about its two product lines follows. Using a plant wide 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. Using the plant wide 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. 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. What might management conclude about each product line? If the market price is $18 per case of Extra Fine and $9 per case of Family Style, determine the gross profit per case for each product. How should management interpret the market paces given your computations? Would your pricing analysis be improved if the company used departmental rates based on machine hours in department 1 and number of cases m department 2, instead of ABC? Explain
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