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. |
Process | Activity | Overhead cost | Driver | Quantity | |||
Department 1 | Mixing | $ | 6,000 | Machine hours | 2,400 | ||
Cooking | 10,800 | Machine hours | 2,400 | ||||
Product testing | 114,000 | Batches | 750 | ||||
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$ | 130,800 | ||||||
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Department 2 | Machine calibration | $ | 325,000 | Production runs | 650 | ||
Labeling | 18,000 | Cases of output | 160,000 | ||||
Defects | 6,000 | Cases of output | 160,000 | ||||
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$ | 349,000 | ||||||
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Support | Recipe formulation | $ | 84,000 | Focus groups | 50 | ||
Heat, lights, and water | 42,000 | Machine hours | 2,400 | ||||
Materials handling | 80,000 | Container types | 10 | ||||
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$ | 206,000 | ||||||
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Additional production information about its two product lines follows. |
Extra Fine | Family Style | ||||||
Units produced | 35,000 | cases | 125,000 | cases | |||
Batches | 350 | batches | 400 | batches | |||
Machine hours | 1,000 | MH | 1,400 | MH | |||
Focus groups | 34 | groups | 16 | groups | |||
Container types | 4 | containers | 6 | containers | |||
Production runs | 260 | runs | 390 | runs | |||
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.
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