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 | $ | 4,500 | Machine hours | 1,500 | ||
Cooking | 11,250 | Machine hours | 1,500 | ||||
Product testing | 112,500 | Batches | 600 | ||||
$ | 128,250 | ||||||
Department 2 | Machine calibration | $ | 250,000 | Production runs | 400 | ||
Labeling | 12,000 | Cases of output | 120,000 | ||||
Defects | 6,000 | Cases of output | 120,000 | ||||
$ | 268,000 | ||||||
Support | Recipe formulation | $ | 90,000 | Focus groups | 45 | ||
Heat, lights, and water | 27,000 | Machine hours | 1,500 | ||||
Materials handling | 65,000 | Container types | 8 | ||||
$ | 182,000 | ||||||
Additional production information about its two product lines follows. |
Extra Fine | Family Style | ||||||
Units produced | 20,000 | cases | 100,000 | cases | |||
Batches | 200 | batches | 400 | batches | |||
Machine hours | 500 | MH | 1,000 | MH | |||
Focus groups | 30 | groups | 15 | groups | |||
Container types | 5 | containers | 3 | containers | |||
Production runs | 200 | runs | 200 | runs | |||
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