Assign overhead co n traditional costing and ABC: compare results. P17.4A (LO 1, 2) Benton Corporation produces two grades of non-alcoholic wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Benton also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called Lite Mist. Lite Mist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as Lite Mist. Manage- ment is considering dropping the inexpensive CoolDay line so it can focus more attention on the Lite Mist product. The Lite Mist product already demands considerably more attention than the CoolDay line. Jack Eller, president and founder of Benton, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line and that it was always quite profitable. It wasn't until the company started producing the more complicated Lite Mist wine that the profitability of CoolDay declined. Prior to the introduction of Lite Mist, the company had basic equipment, simple growing and prod in 1-liter bottles, i does CoolDay quantity as Cool cleaning and inspection and production procedures, and virtually no need for quality control. Because Lite Mist is botica bottles, it requires considerably more time and effort, both to bottle and to label and box man Day. The company must bottle and handle 5 times as many bottles of Lite Mist to sell the same as CoolDay. CoolDay requires 1 month of aging: LiteMist requires 1 vear. CoolDay requires and inspection of equipment every 10,000 liters; Lite Mist requires such maintenance every 600 mters. has asked the accounting department to prepare an analysis of the cost per liter using the anal costing approach and using activity-based costing. The following information was collected. CoolDay Lite Mist Direct materials per liter $0.40 $1.20 Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 0.05 0.09 Total direct labor hours 150,000 27,000 Estimated Overhead $ 145,860 396,000 Estimated Use of Cost Drivers 6,600 6,600,000 Estimated Use of Cost Drivers per Product CoolDay Lite Mist 6,000 600 3,000,000 3,600,000 Activity Cost Pools Grape processing Aging Bottling and corking Labeling and boxing Maintain and inspect equipment Cost Drivers Cart of grapes Total months Number of bottles Number of bottles Number of inspections 270,000 900,000 600,000 300,000 189,000 900,000 600,000 300,000 800 350 450 240,800 $1,241,660 e. Write a memo to Jack Eller discussing the implications of your analysis for the company's plans. In this memo, provide a brief description of ABC as well as an explanation of how the traditional approach can result in distortions