Question
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
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.
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Process | Activity | Overhead cost | Driver | Quantity | |||
Department 1 | Mixing | $ | 5,000 | Machine hours | 1,400 | ||
Cooking | 10,400 | Machine hours | 1,400 | ||||
Product testing | 113,000 | Batches | 1,000 | ||||
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$ | 128,400 | ||||||
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Department 2 | Machine calibration | $ | 275,000 | Production runs | 500 | ||
Labeling | 14,500 | Cases of output | 140,000 | ||||
Defects | 6,500 | Cases of output | 140,000 | ||||
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$ | 296,000 | ||||||
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Support | Recipe formulation | $ | 95,000 | Focus groups | 40 | ||
Heat, lights, and water | 28,000 | Machine hours | 1,400 | ||||
Materials handling | 70,000 | Container types | 8 | ||||
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$ | 193,000 | ||||||
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Additional production information about its two product lines follows.
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