Reference no: EM131599869

Sara’s 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 company’s production support activities follow. Process Activity Overhead cost Driver Quantity Department 1 Mixing $ 6,000 Machine hours 2,400 Cooking 10,800 Machine hours 2,400 Product testing 114,000 Batches 750 $ 130,800 Department 2 Machine calibration $ 325,000 Production runs 650 Labeling 18,000 Cases of output 160,000 Defects 6,000 Cases of output 160,000 $ 349,000 Support Recipe formulation $ 84,000 Focus groups 50 Heat, lights, and water 42,000 Machine hours 2,400 Materials handling 80,000 Container types 10 $ 206,000 Additional production information about its two product lines follows. Extra Fine Family Style Units produced 35,000 cases 125,000 cases Batches 350 batches 400 batches Machine hours 1,000 MH 1,400 MH Focus groups 34 groups 16 groups Container types 4 containers 6 containers Production runs 260 runs 390 runs 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.) Using the plantwide overhead rate, determine the total cost per unit for the two products if the direct materials and direct labor cost is $7 per case of Extra Fine and $6 per case of Family Style. (Round your intermediate calculations and final answers to 2 decimal places.) If the market price of Extra Fine Salsa is $15 per case and the market price of Family Style Salsa is $10 per case, determine the gross profit per case for each product What might management conclude about the Family Style Salsa product line? Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $7 per case of Extra Fine and $6 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.) If the market price is $15 per case of Extra Fine and $10 per case of Family Style, determine the gross profit per case for each product.