Souter Corporation produces two types of juice that it packages in cases of 24 cans per case. Selected per-case data for the two products for the last month follow.

Souter allocates production overhead using activity-based costing but allocates monthly packaging expense, which amounted to $60,000 last month, to the two products equally.

Required
a. Compute the net profit for each product.
b. Assuming that the overhead allocation for the tomato juice includes $30,000 of facility-level costs, would you advise Souter to eliminate this product?

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Orange Juice Tomato Juice Production costs Direct material Direct labor Allocated overhead $2.00 $1.50 S2.25 25,000 $210,000 $1.00 $2.25 $3.00 15,000 S120,000 Total cases produced and sold Total sales revenue