Rosehut Olive Oil Company makes two grades of olive oil: standard and extra virgin. Rosehut...
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Accounting
Rosehut Olive Oil Company makes two grades of olive oil: standard and extra virgin. Rosehut has identified two activity pools, the related costs per pool, the cost driver for each pool, and the expected usage for each pool.
Activity
Total Activity Cost
Cost Driver
Standard
Extra Virgin
Washing, Pressing & Filtering (WPF)
$ 1,929,950
Washing, Pressing, and Filtering hours
48,800
hours
110,700
hours
Bottling
$ 1,267,500
Number of bottles
338,000
bottles
84,500
bottles
Additional information about each grade of olive oil is as follows:
Grade
Sales Revenue
Direct Materials Costs
Direct Labor Costs
Standard
$ 5,195,000
$ 900,000
$ 375,000
Extra Virgin
$ 3,050,000
$ 600,000
$ 150,000
Required:
Calculate the activity rate for each activity pool.
Using the activity rates, determine the total amount of overhead assigned to each product.
Determine total manufacturing cost for each product.
Calculate the gross profit for each product.
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