Sara’s Salsa Company produces its condiments in two types: Extra Fine for restau

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 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 $ 4,800 Machine hours 1,200 Cooking 11,100 Machine hours 1,200 Product testing 112,800 Batches 750 $ 128,700 Department 2 Machine calibration $ 265,000 Production runs 400 Labeling 10,000 Cases of output 165,000 Defects 6,500 Cases of output 165,000 $ 281,500 Support Recipe formulation $ 93,000 Focus groups 60 Heat, lights, and water 30,000 Machine hours 1,200 Materials handling 68,000 Container types 10 $ 191,000 Additional production information about its two product lines follows. Extra Fine Family Style Units produced 23,000 cases 142,000 cases Batches 230 batches 520 batches Machine hours 400 MH 800 MH Focus groups 30 groups 30 groups Container types 7 containers 3 containers Production runs 230 runs 170 runs

Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $6 per case of Extra Fine and $5 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.)

Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $6 per case of Extra Fine and $5 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.)

Explanation / Answer

Ans;

Using ABC, compute the overhead cost per unit for each product line. (Round your intermediate calculations and round activity rate and cost per unit answers to 2 decimal places.)

Required: 1.

Using ABC, compute the overhead cost per unit for each product line. (Round your intermediate calculations and round activity rate and cost per unit answers to 2 decimal places.)

Model 145 Model 212 Activity Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Components Changeover $450,850 710 Number of batches 635 355 225425 355 225425 Machining 389,844 8,330 Machine hours 46.8 3050 142740 5280 247104 Setups 36,300 20 Setups 1815 10 18150 10 18150 Finishing Welding $321,300 5,100 Welding hours 63 2000 126000 3100 195300 Inspecting 344,000 860 Inspections 400 500 200000 360 144000 Rework 58,800 240 Rework hours 245 160 39200 80 19600 Support Purchasing $166,500 555 Purchase orders 300 370 111000 185 55500 Providing space and utilities 83,700 4,500 Units 18.6 1500 27900 3000 55800 Total overhead cost 890415 960879 Total units produced 1500 3000 Overhead cost per unit 593.61 320.29

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