Orioles 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. Orioles Nut House currently offers 19 different types of nuts in one-pound bags through catalogs and gourmet shops. The companys 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 Orioles nuts are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Orioles prices its nuts at cost (including overhead) plus a markup of 40%. 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 $6,553,820, allocated on the basis of each products direct labor cost. The annual budgeted direct labor cost totals $1,243,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $9,096,000 for the year. The unit costs of a one-pound bag of two of the companys products follows.

		Cashews			Chestnuts
Raw materials			$4.40			$3.03
Direct labor			0.34			0.34

Orioles 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		Cost Driver		Budgeted Activity			Budgeted Cost
Purchasing		Purchase orders		11,420			$1,256,200
Material handling		Number of setups		1,850			1,415,250
Quality control		Number of batches		610			314,150
Roasting		Roasting hours		96,200			2,212,600
Seasoning		Seasoning hours		33,240			764,520
Packaging		Packaging hours		25,700			591,100
Total manufacturing overhead cost							$6,553,820

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		Chestnuts
Expected sales		112,900 lbs.		3,000 lbs.
Batch size		10,000 lbs.		500 lbs.
Setups		3 per batch		3 per batch
Purchase order size		2,500 lbs.		50 lbs.
Roasting time		1.10 hour/100 lbs.		1.1 hour/100 lbs.
Seasoning time		0.7 hour/100 lbs.		0.7 hour/100 lbs.
Packaging time		0.2 hour/100 lbs.		0.2 hour/100 lbs.

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 0 decimal places, e.g. 25% and final answers to 2 decimal places, e.g. 15.25.) Cashews Chestnuts Cost $ /lb. $ /lb. Selling Price $ /lb. $ /lb. LINK TO TEXT LINK TO TEXT LINK TO VIDEO LINK TO VIDEO

Calculate ABC rates. Cost Pool Activity Rate Purchasing $ /purchase order Material handling $ /setup Quality control $ /batch Roasting $ /roasting hour Seasoning $ /seasoning hour Packaging $ /packaging hour LINK TO TEXT LINK TO TEXT LINK TO VIDEO LINK TO VIDEO

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. (Round all rates and final answers to 2 decmial places, e.g. 15.25.) Cashews Chestnuts Cost $ / lb. $ / lb. Selling Price $ / lb. $ / lb.