* Problem 7-25 Crane's Nut House is a processor and distributor of a variety of different nuts. The company buys nuts from around the world and roasts, seasons, and packages them for resale. Crane's Nut House currently offers 18 different types of nuts in one-pound bags through catalogs and gourmet shaps. The company's major cost is that of the row nuts; however, the predominantly automated masting and packing processes consume a substantial amount of manufacturing overtirar cost. The company uses relatively little direct labor. Some of Crane's nuts are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Crane's prices its nuts at cost (including overhead) plus a markup of 40%. If the resulting prices of certain nuts are significantly higher than the market price, adjustments are made. Although the company competes primarily on the quality of its products, customers are price conscious. Data for the annual budget include manufacturing averhead of $6,612,610, allocated on the basis af cach product's direct labor cost. The annual budgeted direct labar cast tatals $1,222,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total 59.198,000 for the year. The unit costs of a orie-pound bag of two of the corngany's products follows. Raw materials Direct labor Cashews Chestnuts $4.20 $2.0S 0.39 0.39 Crane's controller believes that the traditional costing system may be providing misleading cost information, so she has develoned the following analysis of the annual budgeted manufacturing costs. Activity Purchasing Material handling Quality control Roasting Seesoring Packaging Total manufacturing overhead cost Cost Driver Purchase orders Number of setups Number of batches Roesting hours Seasoning hours Packaging hours Budgeted Activity 11,540 1,830 600 95,950 33,270 26,440 Budgeted Cost $1,177.000 1,546,350 309,000 2,206,650 765,210 608,120 $6.612.610 Data regarding the annual production of cashews and chestruts follow. All raw material purchased during the period are pressed and all nuts produced are sold within the periad. Expected sales Batch size Setups Purchase arder size Roasting tirre Seesoring time Packaging time Cashews 137,100 lbs. 10,000 lbs. 4 per batch 2,500 lbs. 1.00 hour/100 lbs. 0.8 hour/100 lbs. 0.1 hour/100 lbs. Chestnuts 7,000 hs. 1,000 lbs. 4 per batch 50 lbs. 1.0 hour/100 lbs. 0.8 hour/100 lbs. 0.1 hour/100 lbs. Your answer is correct Using the current casting system, calculate the cost and selling price af one pound of cashews and one pound of chestnuts. (Round predetermined overhead rate to o decimal places, e.g. 25% and final answers to 2 decimal places, e.g. 15.25.) Cashews Chestnuts Cast 35.71) . 15.55 Mb Selling Price 39.28 /D. P.72 Mib. x Your answer is incorrect. Try again. Calculate ABC rates. Cost Pool Activity Rate Purchasing aurchase order Material Handling setup Quality control fetch Roasting roasting hour Seesoning seasoning hour Packaging /aackaging hour Your answer is correct. Using an activity-based costing approach and the information provided, calculate the cost and selling price of one pound of cashews and one pound or chestnuts. (Round all rates and final answers to 2 decmial places, e.g. 15.25.) Cashews Chestnuts 5.16 / It. 9.01/Ib. Selling Price $7.54/lb. $13.74/I. Question Attempts: 4 of 15 used