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, overheadcosts, and drivers associated with these two manufacturing processes and the companys production support activities follow.

Process	Activity	Overhead cost	Driver	Quantity
Department 1	Mixing		$	5,000		Machine hours	1,400
	Cooking			10,400		Machine hours	1,400
	Product testing			113,000		Batches	1,000
			$	128,400
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
			$	296,000
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
			$	193,000

Additional production information about its two product lines follows.

	Extra Fine	Family Style
Units produced	25,000	cases	115,000	cases
Batches	250	batches	750	batches
Machine hours	500	MH	900	MH
Focus groups	27	groups	13	groups
Container types	4	containers	4	containers
Production runs	250	runs	250	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 unit 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.

3.1)	If the market price of Extra Fine Salsa is $17 per case and the market price of Family Style Salsa is $10 per case, determine the gross profit per case for each product.

3. 2)What might management conclude about the Family Style Salsa product line?

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 Overheadcost Activity Drivers Activity rate Activity Drivers Overhead assigned Activity drivers Overhead assigned Mixing & Cooking Product Testing Machine Calibration Labeling & defects Recipe formulation Heat, light & water Material Handling

5.	If the market price is $17 per case of Extra Fine and $10 per case of Family Style, determine the gross profit per case for each product