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Swifty'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,

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Swifty'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 Swifty'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 Swifty's nuts are very popular and sell in large volumes, but some of the newer types sell in very low volumes. Swifty'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 $ 7.737,000, allocated on the basis of each product's direct labor cost. The annual budgeted direct labor cost totals $ 1,934.250. 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. Cashews Chestnuts $ 4.20 $ 3.20 Raw materials Direct labor 0.30 0,30 Swifty'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. Activity Budgeted Activity 11,460 Budgeted Cost Purchasing $ 1.146.000 1,800 1,620,000 Material handling Quality control Roasting Seasoning Cost Driver Purchase orders Number of setups Number of batches Roasting hours Seasoning hours 300,000 600 96,100 2,883,000 33,600 1,008,000 Packaging Packaging hours 26,000 Total manufacturing overhead cost 780,000 $ 7,737,000 Data regarding the annual production of cashews and chestnuts follow. There will be no Raw Materials inventory for either ty nuts at the beginning of the year. Cashews 100,000 lbs. 10,000 lbs. 3 per batch Expected sales Batch size Setups Purchase order size Roasting time Seasoning time Packaging time Chestnuts 5.000 lbs. 500 lbs. 4 per batch 2.500 lbs. 2 hour/100 lbs. 0.50 hour/100 lbs. 0.10 hour/100 lbs. 2,000 lbs. 1 hour/100 lbs. 0.50 hour/ 100 lbs. 0.10 hour/100 lbs. Cashews Chestnuts $ Cost 5.46 , 5 /lb. Selling Price 8,19 /lb. $ /lb

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