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. Management 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 production procedures, and virtually no need for quality control. Because Lite Mist is bottled in 1-liter bottles, it requires considerably more time and effort, both to bottle and to label and box than does CoolDay. The company must bottle and handle 5 times as many bottles of Lite Mist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; Lite Mist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; Lite Mist requires such maintenance every 600 liters. Jack has asked the accounting department to prepare an analysis of the cost per liter using the traditional costing approach and using activity-based costing. The following information was collected. Direct materials per liter Direct labor cost per liter Direct labor hours per liter Total direct labor hours CoolDay Lite Mist $0.40 $1.20 $0.50 $0.90 0.07 0.08 210,000 24.000 Activity Cost Pools Cost Drivers Grape processing Cart of grapes Aging Total months Bottling and corking Number of bottles Labeling and boxing Number of bottles Maintain and inspect equipment Number of inspections Estimated Overhead $146,678 673.200 286,200 233,100 242,400 $1,581,578 Estimated Use of Cost Drivers per Product Estimated Use of Cost Drivers CoolDay Lite Mist 6,600 6.000 600 6,600,000 3,000,000 3,600,000 900,000 600,000 300,000 900,000 600,000 300,000 800 350 450 Answer each of the following questions. x Your answer is incorrect. Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products. (Round answers to 3 decimal places, e.g. 12.250.) CoolDay Lite Mist Manufacturing cost per liter $ 1359 2756 e Textbook and Media Save for Later Attempts: 1 of 10 used Submit Answer Unde r schel showing the computation of the activid ades de resta decimal places 12250) Activity Cost Pools Estimated Overhead of Cost Drivers Activity-Based Overhead Rates per cart Grape processing ading per month per bottle Botting and caring Lag ding er beste Maintain and inspect equipment per inspection Prepare a schedule assigning each s y s overhead cost pool to each product, based on the use of coorvers. Include a computation of overhead cost per Re Round overhead rate cost per her to 3 decimal aces . 12.25 and cost assigned to decimal places . 12.250.) Activity Cest Pool Expected t o Cost Orivers CoolDay Activity Based Overhead Rates Cost Assigned ExpectedUse of Cost Drivers LitNet Activity Based Overhead Rates Cost Assigned Grape processing Botting and coming L andboxing al costs et uits produced Overhead cost per Compute the total manufacturing cost per liter for both products under ABC. (Round overhead cost per liter to 3 decimal places, e.g. 1.225.) CoolDay Lite Mist Manufacturing cost per liter