Sara’s 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 company’s 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

rev: 06_09_2018_QC_CS-128873

4. 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. (Round your intermediate calculations to 2 decimal places. Round "Activity Rate" and "Overhead cost per unit" answers to 2 decimal places.)

Answer rating: 100% (QA)

ABC Costing for Extra Fine and Family Style Salsa Step 1 Calculate Activity Rates Activity Overhead ... View the full answer