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question 12

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	$	4,700		Machine hours	2,800
	Cooking		15,600		Machine hours	2,800
	Product testing		114,400		Batches	650
		$	134,700
Department 2	Machine calibration	$	345,000		Production runs	750
	Labeling		18,000		Cases of output	180,000
	Defects		9,000		Cases of output	180,000
		$	372,000
Support	Recipe formulation	$	88,000		Focus groups	40
	Heat, lights, and water		42,000		Machine hours	2,800
	Materials handling		84,000		Container types	8
		$	214,000

Additional production information about its two product lines follows.

	Extra Fine		Family Style
Units produced	39,000	cases	141,000	cases
Batches	390	batches	260	batches
Machine hours	1,200	MH	1,600	MH
Focus groups	30	groups	10	groups
Container types	4	containers	4	containers
Production runs	300	runs	450	runs

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 $8 per case of Extra Fine and $9 per case of Family Style. 3.a. If the market price of Extra Fine Salsa is $14 per case and the market price of Family Style Salsa is $12 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 $14 per case of Extra Fine and $12 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.) Extra Fine Family Style 4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $8 per case of Extra Fine and $9 per case of Family Style. (Round your intermediate calculations to 2 decimal places. Round "Activity Rate" and "Overhead cost per unit" answers to 2 decimal places.) Family Style Extra fine Overhead Overhead Activity Drivers Activity Rate Activity Drivers Activity Overhead Cost Activity Drivers assigned assigned Mixing & Cooking Product testing Machine calibration Labeling & Defects Recipe formulation Heat, light and water Material handling Extra fine Family Style Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B 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. (Round your intermediate calculations and final answers to 2 decimal places.) Plantwide overhead rate per case Req 1 Req 2

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