Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Process Activity Overhead cost Driver Quantity
Department 1 Mixing $ 6,100 Machine hours 2,500
Cooking 10,900 Machine hours 2,500
Product testing 114,100 Batches 500
$ 131,100
Department 2 Machine calibration $ 330,000 Production runs 600
Labeling 16,500 Cases of output 170,000
Defects 9,000 Cases of output 170,000
$ 355,500
Support Recipe formulation $ 85,000 Focus groups 85
Heat, lights, and water 43,000 Machine hours 2,500
Materials handling 81,000 Container types 10
$ 209,000

Additional production information about its two product lines follows.

Extra Fine Family Style
Units produced 36,000 cases 134,000 cases
Batches 360 batches 140 batches
Machine hours 1,050 MH 1,450 MH
Focus groups 60 groups 25 groups
Container types 8 containers 2 containers
Production runs 270 runs 330 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 $8 per case of Extra Fine and $7 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $16 per case and the market price of Family Style Salsa is $10 per case, determine the gross profit per case for each product. 3.b. What might management conclude about the Family Style Salsa product line?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Connect with your audience

Answered: 1 week ago