Activity-Based Costing and Conventional Costs Compared

Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Gas CookerCharcoal SmokerUnits1,0007,000Number of batches4010Number of batch moves8020Direct materials$50,000$100,000Direct labor$20,000$28,000

Manufacturing overhead follows:

ActivityCostCost DriverMaterials acquisition and inspection$360,000Amount of direct materials costMaterials movement16,600Number of batch movesScheduling30,000Number of batches$406,600

Rounding instructions:Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT:Use 8.4708 for overhead rate calculations.

Total costAnswer

Gas CookerAnswer

per unitCharcoal SmokerAnswer

per unit

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.

Total costAnswer

Gas CookerAnswer

per unitCharcoal SmokerAnswer

per unit