Activity-Based Costing and Conventional Costs Compared

Hickory 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	2,000	8,000
Number of batches	50	20
Number of batch moves	90	50
Direct materials	$ 70,000	$ 130,000
Direct labor	$ 44,000	$ 56,000

Manufacturing overhead follows:

Activity	Cost	Cost Driver
Materials acquisition and inspection	$ 68,000	Amount of direct materials cost
Materials movement	19,600	Numbers of batch moves
Scheduling	43,400	Number of batches
	$ 131,000

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.

Total cost
Gas Cooker		per unit
Charcoal Smoker		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
Gas Cooker		per unit
Charcoal Smoker		per unit