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 SmokerUnits1,0003,000Number of batches2010Number of batch moves8020Direct materials$30,000$100,000Direct labor$20,000$29,000

Manufacturing overhead follows:

ActivityCostCost DriverMaterials acquisition and inspection$299,000Amount of direct materials costMaterials movement16,600Number of batch movesScheduling18,000Number of batches$333,600

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.

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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 Cooker Charcoal Smoker Units 1,000 3,000 Number of batches 20 10 Number of batch moves 80 20 Direct materials $30,000 $100,000 Direct labor $20,000 $29,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $299,000 Amount of direct materials cost Materials movement 16,600 Number of batch moves Scheduling 18,000 Number of batches $333,600 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 6.8082 for overhead rate calculations. Total cost 0 x Gas Cooker $ 85.82 * per unit Charcoal Smoker $ 32.42 x 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 cost 0 x Gas Cooker 90.7 * per unit Charcoal Smoker $ 31.2 * per unit