Based on the below case, find the cost per carton $"$In preparation for her meeting with Dr$.$ Johnson, the Cracker Division manager has decided to discuss her trial activity$-$based costing $($ABC$)$ system. The division has been using a very simple costing system where all manufacturing overhead has been combined into one cost pool and allocated to each product based on the total number of cartons produced$\mathrm{.}2$ Based on this simple costing system, the per carton manufacturing costs are as follows:

Saltine Crackers

Graham Crackers

Direct Materials per Carton

$$0\mathrm{.}90/$ carton

$$1\mathrm{.}20/$ carton

Direct Labor per Carton

$$0\mathrm{.}40/$ carton

$$0\mathrm{.}60/$ carton

Manufacturing Overhead per Carton

$$1\mathrm{.}60/$ carton

$$1\mathrm{.}60/$ carton

Total Carton Cost

$$2\mathrm{.}90/$ carton

$$3\mathrm{.}40/$ carton

Currently, each carton of Saltine Crackers sells for $$3\mathrm{.}30/$carton$,$ and each carton of Graham Crackers sells for $$3\mathrm{.}90/$carton$.$

In her trial ABC system, the divisional manager has defined three activities with corresponding activity drivers. Her first activity is $$Preparing the Dough$,$ which includes measuring and mixing of ingredients as

$2$ Since most of the manufacturing process is automated, labor costs are relatively small. As a result, the current costing system treats labor costs as part of the manufacturing overhead.

$5$

well as fermentation; the activity driver is direct labor hours per carton. Her second activity is $$Shaping and Baking$,$ which includes extruding and folding of the dough, cutting the dough into the appropriate shapes and baking; the activity driver is total machine hours used in all production steps, per carton. Finally, her third activity is $$Separating and Packaging$,$ which includes separating, stacking and counting, and packaging; the activity driver is number of cartons produced. Production information for each product is as follows:

$3$

Saltine Crackers

Graham Crackers

Direct Labor Hours per Carton

$0\mathrm{.}02$ hrs $/$ carton

$0\mathrm{.}03$ hrs $/$ carton

Machine Hours per Carton

$0\mathrm{.}1$ Mhrs $/$ carton

$0\mathrm{.}2$ Mhrs $/$ carton

# of Cartons Produced

$400,000$ cartons

$100,000$ cartons

In the first stage of her trial ABC system, the divisional manager has calculated the following total activity costs for each activity:$4$

Activity

Total Activity Costs

Preparing the Dough

$$110,000$

Shaping and Baking

$$480,000$

Separating and Packaging

$$210,000$

Before her meeting with the CEO, the divisional manager knows she needs to calculate per carton manufacturing costs using her trial ABC system, and she needs to think about what can be done with the resulting information."