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 LiteMist 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. CoolDay Lite Mist $0.40 $1.20 Direct materials per liter Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 0.04 0.08 Total direct labor hours 120,000 24,000 Estimated Use of Cost Drivers per Product Estimated Overhead Estimated Use of Cost Drivers Activity Cost Pools Cost Drivers CoolDay Lite Mist Grape processing Cart of grapes $147,008 6,600 6,000 600 Aging Total months 653,400 6,600,000 3,000,000 3,600,000 Bottling and corking Number of bottles 306,000 900,000 600,000 300,000 Labeling and boxing Number of bottles 205,200 900,000 600,000 300,000 Maintain and inspect equipment Number of inspections 241,600 800 350 450 $1,553,208 Answer each of the following questions. (a) Your answer has been saved. See score details after the due date. 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 $ 1.331 $ 2.963 Attempts: 1 of 1 used (b) Your answer has been saved. See score details after the due date. Under ABC, prepare a schedule showing the computation of the activity-based overhead rates (per cost driver). (Round overhead rates to 3 decimal places, e.g. 12.250.) Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers Activity-B Overhead R Grape processing 147008 6600 2. Aging 653400 6600000 $ Bottling and corking 306000 900000 $ Labeling and boxing 205200 900000 $ Maintain and inspect equipment 241600 800 $ 1553208 Attempts: 1 of 1 used (c) Your answer has been saved. See score details after the due date. Prepare a schedule assigning each activity's overhead cost pool to each product, based on the use of cost drivers. Include a computation of overhead cost per liter. (Round overhead rate, cost per liter to 3 decimal places, e.g. 12.250 and cost assigned to o decimal places, e.g. 12,250.) List Mist Estimated Use of Cost Drivers Activity-Based Overhead Rates Cost Assigned 600 $ 22.274 $ 13364 3600000 $ .099 356400 ON 300000 $ .34 102000 300000 $ 228 68400 450 $ 302 135900 $ 676064 300000 $ 2.254 Attempts: 1 of 1 used (d) 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 $ Save for Later Attempts: 0 of 1 used Submit