Question

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 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 DEEN Departament 1 vilt Mixing Cooking Product testing Labels met, lights, and water 1,500 Additional production Information about its two product lines follows Costarts woon Problem 4-5A Part 4 4. Using ABC, compute the total cost per case for each product type If the direct labor and direct materials costs $6 per case of Extra Fine and $5 percase of Family Style. (Round your Intermediate calculations to 2 decimal places. Round "Activity Rate and "Overhead cost per unit" answers to 2 decimal places.) Activity Overhead Cost Activity Drivers < Prev 100 TH Next >

Answer 1

4. Using ABC, compute the total cost per case for each product type
						Extra fine		Family style
Activity	Overhead cost (a)	Activity drivers (b)		Activity Rate (c = a / b)		Activity drivers (d)	Overhead assigned (c x d)	Activity drivers (e)	Overhead assigned (c x e)
Mixing and cooking	$15,750 [$4,500 + $11,250]	1,500	machine hours	$10.50	per machine hour	500	$5,250	1,000	$10,500
Production testing	$112,500	600	batches	$187.50	per batch	200	$37,500	400	$75,000
Machine calibration	$250,000	400	production runs	$625.00	per production run	200	$125,000	200	$125,000
Labeling and Defects	$18,000 [$12,000 + $6,000]	120,000	cases	$0.15	per case	20,000	$3,000	100,000	$15,000
Recipe formulation	$90,000	45	groups	$2,000.00	per group	30	$60,000	15	$30,000
Heat, light and water	$27,000	1,500	machine hours	$18.00	per machine hour	500	$9,000	1,000	$18,000
Materials handling	$65,000	8	container types	$8,125.00	per type	5	$40,625	3	$24,375
						Total overhead costs assigned      (f)	$280,375	Total overhead costs assigned      (f)	$297,875
						Total units produced                      (g)	20,000	Total units produced                      (g)	100,000
						Overhead cost per unit                    (f / g)	14.02	Overhead cost per unit                    (f / g)	2.98
					Extra fine	Family style
				Direct materials and direct labor    (h)	$6.00	$5.00
				Overhead    [Calculated above]       (i)	$14.02	$2.98
				Total cost / Case                              (h + i)	$20.02	$7.98