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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 $ 4,600 Machine hours 2,700
Cooking 11,600 Machine hours 2,700
Product testing 114,300 Batches 600
$ 130,500
Department 2 Machine calibration $ 340,000 Production runs 800
Labeling 20,000 Cases of output 135,000
Defects 7,000 Cases of output 135,000
$ 367,000
Support Recipe formulation $ 87,000 Focus groups 75
Heat, lights, and water 54,000 Machine hours 2,700
Materials handling 83,000 Container types 8
$ 224,000

Additional production information about its two product lines follows.

Extra Fine Family Style
Units produced 38,000 cases 97,000 cases
Batches 380 batches 220 batches
Machine hours 1,150 MH 1,550 MH
Focus groups 64 groups 11 groups
Container types 3 containers 5 containers
Production runs 290 runs 510 runs

Problem 17-5A Parts 1, 2 & 3

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 $10 per case of Extra Fine and $8 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $18 per case and the market price of Family Style Salsa is $13 per case, determine the gross profit per case for each product. 3.b. What might management conclude about the Family Style Salsa product line?

5. If the market price is $18 per case of Extra Fine and $13 per case of Family Style, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.)

***please be advised, there is NO PART 4 to this question. It goes from 3b, to 5.

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