Using an activity-based costing approach and the information provided, calculate the cost and selling price of one pound of cashews and one pound of chestnuts.
*Problem 7-25 Coronado's Nut House is a processor and distributor of a variety of difTerent nuts. The company buys nuts from around the world and roasts, seasons, and packages them for resale. Coronado's Nut House currently offers 23 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 Som e of Coronado's nu s are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Coronado's prices its nuts at o st including overhead plus a markup of 40% If the resulting prices 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 ind de manufacturing overhead of S5 651,900, allocated on the basis or each product's direct labor cost. The annual budgeted direct labor cost totals 1,229,000 Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $9,170,000 for the year The unit costs of a one-pound bag of two of the company's products follows. Raw materials $4.30 0.26 .2 Direct labor Coronado'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. Cost Driver Purchase orders Number of setups Number of batches Roasting hours Seasoning hours Packaging hours Activity Budgeted Cost $1,217,940 1,504,500 288,000 1,628,940 566,100 446,420 $5,651,900 11,490 1,770 600 Material handling Quality control Roasting Seasoning Packaging Total manufacturing overhead cost Data regarding the annual production of cashews and chestnuts follow. All raw materials purchased during the period are processed and all nuts produced are sold within the period. Cashews Expected sales Batch size 118,900 lbs. 10,000 lbs. 4 per batch 2,500 Ibs. 3,000 bs 1,000 Ibs 4 per batch 50 lbs Purchase order size Roasting time Seasoning time Packaging time 1.40 hour/100 lbs 1.4 hour/100 Ibs. 0.5 hour/100 lbs. 0.5 hour/100 Ibs. .1 hour/100 lbs. 0.1 hour/100 Ibs Your answer is correct. 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, e.g. 25% and final answers to 2 decimal places, e.g. 15.25) Cashews Chestnuts Cost b 4.72lb. Selling Price$8.06b 5.61 b Your answer is correct. Calculate ABC rates. Cost Pool Activity Rate Purchasing0uchase order Material handling Quality control $480h /setup 1 roasting hour 17seasoning hour Packaging /packaging hour Your answer is incorrect. Try again. Using an activity-based costing approach and the information provided, calculate the cost and selling price of one pound of cashews and one pound of chestuts. (Round all rates and final answers to 2 decmial places, e.g. 15.25.) Tb Ib Ib Selling Price
