Required information The foWowing information appWes to the questions displayed

Question

Required information The foWowing information appWes 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 activinies follow Part 2 of 3 20 Overhead eost ,408 ,o00 0,400 achine houra rroduet testing 14.500 Cases of ostput Cases of output 140,000 Recipe formuletion materials bandling Container types Additional production information about its two product lines follows 115,000 case 27 group 1 grop contaiss 250 rana 4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $8 per case of Extra K Prev

Explanation / Answer

Solution:

Determination of activity rate for each activity & allocation of overhead and overhead cost per case Activity Estimated Overhead Cost Activity Base Usage of Activity Base Activity Rate Extra Fine Family Style Usage Allocated Costs Usage Allocated Costs Mixing and cooking $15,400.00 Machine hours 1400 $11.00 500 $5,500.00 900 $9,900.00 Product testing $113,000.00 Batches 1000 $113.00 250 $28,250.00 750 $84,750.00 Machine calibration $275,000.00 Production Runs 500 $550.00 250 $137,500.00 250 $137,500.00 Labeling and Defects $21,000.00 Cases of output 140000 $0.15 25000 $3,750.00 115000 $17,250.00 Receipe formation $95,000.00 Focus Group 40 $2,375.00 27 $64,125.00 13 $30,875.00 Heat, lights and water $28,000.00 Machine hours 1400 $20.00 500 $10,000.00 900 $18,000.00 Materials handling $70,000.00 Container type 8 $8,750.00 4 $35,000.00 4 $35,000.00 Total $617,400.00 $284,125.00 $333,275.00 Nos of cases 25000 115000 Allocated overhead per unit $11.37 $2.90

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