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Saras 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 companys production support activities follow.

Process	Activity	Overhead cost				Driver	Quantity
Department 1	Mixing		$	6,000		Machine hours	2,400
	Cooking			10,800		Machine hours	2,400
	Product testing			114,000		Batches	750
			$	130,800
Department 2	Machine calibration		$	325,000		Production runs	650
	Labeling			18,000		Cases of output	160,000
	Defects			6,000		Cases of output	160,000
			$	349,000
Support	Recipe formulation		$	84,000		Focus groups	50
	Heat, lights, and water			42,000		Machine hours	2,400
	Materials handling			80,000		Container types	10
			$	206,000

Additional production information about its two product lines follows.

	Extra Fine		Family Style
Units produced	35,000	cases	125,000	cases
Batches	350	batches	400	batches
Machine hours	1,000	MH	1,400	MH
Focus groups	34	groups	16	groups
Container types	4	containers	6	containers
Production runs	260	runs	390	runs
Using a plantwide overhead rate based on cases, compute the overhead cost that is assigned to each case of Extra Fine Salsa and each case of Family Style Salsa. Using the plantwide overhead rate, determine the total cost per unit for the two products if the direct materials and direct labor cost is $7 per case of Extra Fine and $6 per case of Family Style f the market price of Extra Fine Salsa is $15 per case and the market price of Family Style Salsa is $10 per case, determine the gross profit per case for each product. What might management conclude about the Family Style Salsa product line? Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $7 per case of Extra Fine and $6 per case of Family Style If the market price is $15 per case of Extra Fine and $10 per case of Family Style, determine the gross profit per case for each product.

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