Question

Required information (The following information applies to the questions displayed below.] 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 Department 1 Activity Mixing Cooking Product testing Driver Machine hours Machine hours Batches Quantity 1,400 1,400 1,000 Department 2 Machine calibration Labeling Defects Overhead cost $ 5,000 10,400 113,000 $ 128,400 $ 275,000 14,500 6,500 $ 296,000 $ 95,000 28,000 70,000 $ 193,000 Production runs Cases of output Cases of output 500 140,000 140,000 Support Recipe formulation Heat, lights, and water Materials handling Focus groups Machine hours Container types 40 1,400 Additional production information about its two product lines follows. Units produced Batches Machine hours Focus groups Container types Production runs Extra Fine 25,000 cases 250 batches 500 MH 27 groups 4 containers 250 runs Family Style 115,000 cases 750 batches 900 MH 13 groups 4 containers 250 runs

Answer 1

1)	Plantwide overhead rate
	Estimated overhead/total cases
	617400/140,000
	4.41
	plantwide overhead rate			$4.41	per case
				total cost per unit
2)	Extra Fine			12.41
	Family Style			11.41
3)	Extra Fine		profit	4.59
	Family Style		loss	-1.41
										Extra fine			Family style
			overhead	Avtivity Driver			Activity rate			Activity Drivers		overhead	Activity Drivers		overhead
4)	Activity		cost									assinged			assinged
	Mixing & cooking		15,400	1,400	machine hours		11	per machine hour		500		5500	900		9900
	product testing		113,000	1000	Batches		113	per batch		250		28250	750		84750
	Machine Calibration		275,000	500	production run		550	per production run		250		137500	250		137500
	Labeling & Defects		21,000	140,000	cases of output		0.15	per case		25000		3750	115,000		17250
	Recipe formulation		95,000	40	Focus groups		2375	per focus group		27		64125	13		30875
	heat,light and water		28,000	1,400	machine hours		20	per machine hour		500		10000	900		18000
	Material handling		70,000	8	container type		8750	per container type		4		35000	4		35000
			617,400							total OH cost assign		284125	total OH cost assign		333275
										total units produced		25,000	total units produced		115,000
										oh cost per unit		11.37	oh cost per unit		2.90
									Extra	Family
									fine	Style
						Direct materials & direct labor			8.00	7.00
						overhead			11.37	2.90
						tota cost/case			19.37	9.90
	5)	Extra Fine		loss	-2.37
		Family Style		profit	0.10