Sheridan's Nut House is a processor and distributor of a variety of different nuts. The company buys nuts from around the world and roasts, seasons, and packages them for resale. Sheridan's Nut House currently offers 15 different types of nuts in one-pound bags through catalogs and gourmet shops. The company's major cost is that of the raw nuts; however, the predominantly automated roasting and packing processes consume a substantial amount of manufacturing overhead cost. The company uses relatively little direct labor. Some of Sheridan's nuts are very popular and sell in large volumes, but some of the newer types sell in very low volumes. Sheridan's prices its nuts at cost (including overhead) plus a markup of 50%. If the resulting prices of certain nuts are significantly higher than the market price, adjustments are made. Although the company competes primarily on the quality of its products, customers are price conscious. Data for the annual budget include manufacturing overhead of $ 6,120,000, allocated on the basis of each product's direct labor cost. The annual budgeted direct labor cost totals $ 1,530,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $ 9,000,000 for the year. The unit raw material and direct labor costs of a one-pound bag of two of the company's products follows. Raw materials Cashews Chestnuts $4.30 0.30 0.30 $3.20 Direct labor Sheridan's controller believes that the traditional costing system may be providing misleading cost information, so she has developed the following analysis of the annual budgeted manufacturing costs. Budgeted Activity Activity Cost Driver Budgeted Cost Purchase orders 11,460 Purchasing Material handling Quality control Number of setups 1,800 Number of batches Roasting hours $ 1,146,000 1.440,000 420,000 1,922,000 672,000 520,000 600 96,100 33,600 26.000 Roasting Seasoning Seasoning hours Packaging hours Packaging Total manufacturing overhead cost $ 6,120.000 Data regarding the annual production of cashews and chestnuts follow. There will be no Raw Materials Inventory for either type of nuts at the beginning of the year. Cashews Chestnuts 5.000 lbs. Expected sales Batch size 500 lbs. 4 per batch Setups Purchase order size 100,000 lbs. . 10,000 lbs. 3 per batch 2,000 lbs. . 1 hour/ 100 lbs. 1 / 0.50 hour/ 100 lbs. 0.10 hour/ 100 lbs. . Roasting time 2,500 lbs. 2 . 2 hour/ 100 lbs. 0.50 hour/ 100 lbs. Seasoning time Packaging time 0.10 hour/ 100 lbs. (a) Using the current costing system, calculate the cost and selling price of one pound of cashews and one pound of chestnuts. (Round predetermined overhead rate to O decimal places, eg. 25% and final answers to 2 decimal places, eg. 15.25.) Cashews Chestnuts $ /lb. $ Cost /lb. . $ /lb. $ /lb. Selling Price