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Sara's Salsa Company produces its condiments in two types: Extra Fine for restaurant customers an 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. rocess os Department 1 Mixing $ 5,200 Machine hours Cooking Product testing 1,600 1,600 500 10,800 Machine hours 113200 Batches $129,200 285, 000 Production runs Department 2 Machine calibration Labeling Defects 10,500Cases of output 5,000 Cases of output 750 155,000 155,000 $300,500 $97,000 Focus groups Support Recipe formulation Heat, 1ights, and water Materials handling 34,000 Machine hours 72,000 Container types 50 1,600 $203,000 Additional production information about its two product lines follows. Extra Fine Family Style 128,000 cases Units produced Batches Machine hours Focus groups Container types Production runs 27,000 cases 270 batches 600 MH 230 batches 1,000 MB 40 groups 10 groupS 6 containers 270 runs 2 containers 480 runs

Answer 1

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL							Extra Fine		Family Style
			Activity	Total	Expected	Activity	Driver	OH cost	Driver	OH
ACTIVITY COST POOL			Measures	Overheads	Activity	Rate
Mixing			MH	5200	1600	3.25	600	1950	1000	3250
Cooking			MH	10800	1600	6.75	600	4050	1000	6750
Product testing			Batches	113200	500	226.4	270	61128	230	52072
machine Caibration			Runs	285000	750	380	270	102600	480	182400
Labelling			Output	10500	155000	0.067742	27000	1829.032	128000	8670.968
Defects			Output	5000	155000	0.032258	27000	870.9677	128000	4129.032
Recipe formulation			Focus group	97000	50	1940	40	77600	10	19400
Heat, light and water			MH	34000	1600	21.25	600	12750	1000	21250
material handling			Container types	72000	8	9000	6	54000	2	18000
					Total Overheads			316778		315922
					Divide: Units			27000		128000
					OH cost per unit			11.73		2.47
Unit Product cost
			Extra fine	family style
Direct material and labour cost			10	9
OH cost			11.73	2.47
Unit product cost			21.73	11.47