Question 1 Vaughns 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. Vaughns Nut House currently offers 20 different types of nuts in one-pound bags through catalogs and gourmet shops. The companys major cost is that of the raw nuts; however, the predominantly automated roasting and packing processes consume a substantial amount of manufacturing overhead cost. The company uses relatively little direct labor. Some of Vaughns nuts are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Vaughns 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 overhead of $5,615,050, allocated on the basis of each products direct labor cost. The annual budgeted direct labor cost totals $1,250,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $9,021,000 for the year. The unit costs of a one-pound bag of two of the companys products follows. Cashews Chestnuts Raw materials $4.20 $3.22 Direct labor 0.25 0.25 Vaughns controller believes that the traditional costing system may be providing misleading cost information, so she has developed the following analysis of the annual budgeted manufacturing costs. Activity Cost Driver Budgeted Activity Budgeted Cost Purchasing Purchase orders 11,420 $1,153,420 Material handling Number of setups 1,840 1,545,600 Quality control Number of batches 600 288,000 Roasting Roasting hours 95,560 1,624,520 Seasoning Seasoning hours 33,160 563,720 Packaging Packaging hours 25,870 439,790 Total manufacturing overhead cost $5,615,050 Data regarding the annual production of cashews and chestnuts follow. All raw materials purchased during the period are processed and all nuts produced are sold within the period. Cashews Chestnuts Expected sales 128,700 lbs. 3,000 lbs. Batch size 10,000 lbs. 500 lbs. Setups 4 per batch 4 per batch Purchase order size 2,500 lbs. 50 lbs. Roasting time 1.20 hour/100 lbs. 1.2 hour/100 lbs. Seasoning time 0.3 hour/100 lbs. 0.3 hour/100 lbs. Packaging time 0.1 hour/100 lbs. 0.1 hour/100 lbs.

Using an activity-based costing approach and the information provided, calculate the cost and selling price of one pound of cashews and one pound of chestnuts. (Round all rates and final answers to 2 decmial places, e.g. 15.25.) Cashews Chestnuts Cost $ Entry field with incorrect answer now contains modified data / lb. $ Entry field with incorrect answer now contains modified data / lb. Selling Price $ Entry field with incorrect answer now contains modified data / lb. $ Entry field with incorrect answer now contains modified data / lb.