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 | $ | 7,000 | Machine hours | 2,900 | |
Cooking | 16,200 | Machine hours | 2,900 | |||
Product testing | 114,500 | Batches | 500 | |||
$ | 137,700 | |||||
Department 2 | Machine calibration | $ | 350,000 | Production runs | 700 | |
Labeling | 18,500 | Cases of output | 140,000 | |||
Defects | 9,500 | Cases of output | 140,000 | |||
$ | 378,000 | |||||
Support | Recipe formulation | $ | 89,000 | Focus groups | 50 | |
Heat, lights, and water | 58,000 | Machine hours | 2,900 | |||
Materials handling | 85,000 | Container types | 10 |
Additional production information about its two product lines follows.
Extra Fine | Family Style | |||
Units produced | 40,000 | cases | 100,000 | cases |
Batches | 400 | batches | 100 | batches |
Machine hours | 1,250 | MH | 1,650 | MH |
Focus groups | 32 | groups | 18 | groups |
Container types | 5 | containers | 5 | containers |
Production runs | 310 | runs | 390 | runs |
4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $11 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 Activity Activity Drivers Overhead Cost Activity Rate Activity Drivers Mixing & Cooking Product testing Machine calibration Labeling & Defects Recipe formulation Heat, light and water Material handling Total overhead costs assigned Extra fine Family Style Extra fine Family Style Overhead assigned Overhead Privers Activity Drivers assigned osts assigned StyleStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started