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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		$	5,900		Machine hours	2,300
	Cooking			12,500		Machine hours	2,300
	Product testing			113,900		Batches	850
			$	132,300
Department 2	Machine calibration		$	320,000		Production runs	500
	Labeling			19,000		Cases of output	150,000
	Defects			8,000		Cases of output	150,000
			$	347,000
Support	Recipe formulation		$	83,000		Focus groups	50
	Heat, lights, and water			46,000		Machine hours	2,300
	Materials handling			79,000		Container types	8
			$	208,000

Additional production information about its two product lines follows.

	Extra Fine		Family Style
Units produced	34,000	cases	116,000	cases
Batches	340	batches	510	batches
Machine hours	950	MH	1,350	MH
Focus groups	32	groups	18	groups
Container types	5	containers	3	containers
Production runs	250	runs	250	runs

1.

value: 8.00 points

Required information

Required:
1.	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. (Round your intermediate calculations and final answers to 2 decimal places.)

2.	Using the plantwide overhead rate, determine the total cost per unit for the two products if the direct materials and direct labor cost is $10 per case of Extra Fine and $9 per case of Family Style. (Round your intermediate calculations and final answers to 2 decimal places.)

3.1	If the market price of Extra Fine Salsa is $19 per case and the market price of Family Style Salsa is $13 per case, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.)

3.2	What might management conclude about the Family Style Salsa product line?
	Eliminate Family Style Retain Family Style

2.

value: 25.00 points

Required information

4.	Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $10 per case of Extra Fine and $9 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.)

3.

value: 5.00 points

Required information

5.	If the market price is $19 per case of Extra Fine and $13 per case of Family Style, determine the gross profit per case for each product. (Round your intermediate calculations and final answers to 2 decimal places.)

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