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Idaho Potatoes (IP) grows and processes potatoes in its one plant. It sells potatoes to two markets retail and institutional. The following information is available after a recent year-end:

	Retail	Institutional	Total
Pounds of Potatoes	900,000	100,000	1,000,000
Direct Material Cost	$135,000	$15,000	$150,000
Production Support			$983,000

IP currently allocates production support on the basis of pounds of potatoes.

IP recently made a bid to supply 25,000 pounds of potatoes to a college. It wants to add a profit of 20% of the cost in determining the selling price.

Part 2 After learning that their bid was rejected for being too high, IP decided to use ABC costing to calculate their unit cost and then submit a new bid. They were able to break out their production support costs as follows: To Retail 190 To Total Institutional Usage | 10 200 Total Allocation Costs Basis Packaging $188,000 # Materials Deliveries Cleaning $120,000 Pounds Cutting $231,000 hours 100,000 250 hours 1,000,000 3,850 900,000 3600 hours 36,000 hours Packaging $444,000 hours 1,000 hours 37,000 Total $983,000 Required Using Excel, create a schedule showing the direct materials, packaging materials, cleaning, cutting and packaging costs for each product and the total cost. Calculate the unit cost for each product. Calculate the new bid on the 25,000 pounds of potatoes to the institutional client. Using Word, write an executive summary explaining your results. Step by Step Instructions 1. Calculate the overhead rate for all four overhead cost pools 2. Allocate all four overhead costs to the two products 3. Calculate the total cost for each product 4. Calculate the cost per pound for each product 5. Calculate the cost of the order of 25,000 pounds (institutional customer 6. Add the profit to the order of 25,000 pounds 7. Calculate the total price of 25,000 pounds to the institutional customer

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