Rosehut Olive Oil Company makes two grades of olive oil: standard and extra virgin. Rosehut has identified two activity cost 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$)$ $ $1,778,400$ Washing, Pressing, and Filtering hours $47,400$ hours $108,600$ hours

Bottling $ $931,500$ Number of bottles $324,000$ bottles $81,000$ bottles

Additional information about each grade of olive oil is as follows:

Grade Sales Revenue Direct Materials Costs Direct Labor Costs

Standard $ $5,160,000$ $ $900,000$ $ $375,000$

Extra Virgin $ $2,700,000$ $ $600,000$ $ $150,000$

Required:

$1.$ Calculate the activity rate for each cost pool.

$2.$ Using the activity rates, determine the total amount of overhead assigned to each product.

$3.$ Determine total manufacturing cost for each product.

$4.$ Calculate the gross profit for each product.

Answer rating: 100% (QA)

1 Activity Rate Calculation To calculate the activity rate for each cost pool we divide the total ac... View the full answer