Waterway's Nut House is a processor and distributor of a variety of different nuts. The company...
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Waterway'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. Waterway's Nut House currently offers 15 different types of nuts in one-pound bags through catalogs and gourmet shops. The company's 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 Waterway's nuts are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Waterway'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 overhead of $6,011,640, allocated on the basis of each product's direct labor cost. The annual budgeted direct labor cost totals $1,237,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $9,210,000 for the year. The unit costs of a one-pound bag of two of the company's products follows. Cashews Chestnuts Raw materials $4.40 $3.07 Direct labor 0.28 0.28 Waterway's 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. Budgeted Activity Budgeted Cost Activity Cost Driver Purchasing Purchase orders 11,430 $1,177,290 Material handling Number of setups 1,800 1,440,000 Quality control Number of batches 590 297,950 Roasting Roasting hours 95,510 1,910,200 Seasoning Seasoning hours 33,410 668,200 Packaging Packaging hours 25,900 518,000 Total manufacturing overhead cost $6,011,640 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 120,900 Ibs. 3,000 lbs. Batch size 10,000 Ibs. 1,000 Ibs. Setups 4 per batch 4 per batch Purchase order size 2,500 Ibs. 50 Ibs. Roasting time 1.00 hour/100 Ibs. 1.0 hour/100 Ibs. Seasoning time 0.4 hour/100 Ibs. 0.4 hour/100 Ibs. Packaging time 0.1 hour/100 Ibs. 0.1 hour/100 Ibs. xYour answer is incorrect. Try again. Using the current costing system, calculate the cost and selling price of one pound of cashews and one pound of chestnuts. (Round predetermined overhead rate to 0 decimal places, e.g. 25% and final answers to 2 decimal places, e.g. 15.25.) Cashews Chestnuts 1.93 /lb. 1.4 /lb. Cost 6.75 /lb. 4.89 /lb. Selling Price X Your answer is incorrect. Try again. Calculate ABC rates. Cost Pool Activity Rate Purchasing /purchase order Material handling /setup Quality control %$4 /batch Roasting /roasting hour Seasoning %24 /seasoning hour Packaging /packaging hour LINK TO TEXT LINK TO TEXT LINK TO VIDEO LINK TO VIDEO x Your answer is incorrect. Try again. 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 / lb. / Ilb. Cost / lb. / Ib. Selling Price Click if you would like to Show Work for this question: Open Show Work Waterway'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. Waterway's Nut House currently offers 15 different types of nuts in one-pound bags through catalogs and gourmet shops. The company's 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 Waterway's nuts are very popular and sell in large volumes, but a few of the newer types sell in very low sales volumes. Waterway'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 overhead of $6,011,640, allocated on the basis of each product's direct labor cost. The annual budgeted direct labor cost totals $1,237,000. Based on the sales budget and raw materials standards, purchases and use of raw materials are expected to total $9,210,000 for the year. The unit costs of a one-pound bag of two of the company's products follows. Cashews Chestnuts Raw materials $4.40 $3.07 Direct labor 0.28 0.28 Waterway's 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. Budgeted Activity Budgeted Cost Activity Cost Driver Purchasing Purchase orders 11,430 $1,177,290 Material handling Number of setups 1,800 1,440,000 Quality control Number of batches 590 297,950 Roasting Roasting hours 95,510 1,910,200 Seasoning Seasoning hours 33,410 668,200 Packaging Packaging hours 25,900 518,000 Total manufacturing overhead cost $6,011,640 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 120,900 Ibs. 3,000 lbs. Batch size 10,000 Ibs. 1,000 Ibs. Setups 4 per batch 4 per batch Purchase order size 2,500 Ibs. 50 Ibs. Roasting time 1.00 hour/100 Ibs. 1.0 hour/100 Ibs. Seasoning time 0.4 hour/100 Ibs. 0.4 hour/100 Ibs. Packaging time 0.1 hour/100 Ibs. 0.1 hour/100 Ibs. xYour answer is incorrect. Try again. Using the current costing system, calculate the cost and selling price of one pound of cashews and one pound of chestnuts. (Round predetermined overhead rate to 0 decimal places, e.g. 25% and final answers to 2 decimal places, e.g. 15.25.) Cashews Chestnuts 1.93 /lb. 1.4 /lb. Cost 6.75 /lb. 4.89 /lb. Selling Price X Your answer is incorrect. Try again. Calculate ABC rates. Cost Pool Activity Rate Purchasing /purchase order Material handling /setup Quality control %$4 /batch Roasting /roasting hour Seasoning %24 /seasoning hour Packaging /packaging hour LINK TO TEXT LINK TO TEXT LINK TO VIDEO LINK TO VIDEO x Your answer is incorrect. Try again. 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 / lb. / Ilb. Cost / lb. / Ib. Selling Price Click if you would like to Show Work for this question: Open Show Work
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Solution 1 Cost and Selling price per pound Cashews Chestnuts Raw Materials 440 307 Direct labor 028 ... View the full answer
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