Bonita 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. Bonita also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called Lite 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 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 Bonita, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line and that it was always quit 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 LiteMist, the comp 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 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 6 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 informati was collected. Direct materials per liter Direct labor cost per liter Direct labor hours per liter Total direct labor hours CoolDay $0.40 $0.50 0.04 120,000 Lite Mist $1.20 $0.90 0.07 21,000 Estimated Use of Cost Drivers per Product Cost Drivers Activity Cost Pools Grape processing Aging Bottling and corking Labeling and boxing Maintain and inspect equipment Cart of grapes Total months Number of bottles Number of bottles Number of inspections Estimated Overhead $147,022 699,600 280,800 214,200 244,800 $1,586,422 Estimated Use of Cost Drivers 6,600 6,600,000 900,000 900,000 CoolDay 6,000 3,000,000 600,000 600,000 350 Lite Mist 600 3,600,000 300,000 300,000 450 800 Answer each of the following questions. X] your answer is incorrect. Try again. 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 1.078 2.471 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 Grape processing 1 147,022 Aging 699.600 6.600.000 Activity-Based Overhead Rates 22.276 per cart 0.106 per month 0.312 per bottle 0.238 per bottle 306 per inspection Bottling and corking 280,800 Labeling and boxing T 214,200 244,800 1,586,422 T 1 900,000 800 Maintain and inspect equipment LINK TO TEXT LINK TO TEXT VIDEO: STHILAR PROBLEM your answer is partially correct. Try again. 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 12,250.) List Mist CoolDay Activity-Based Overhead Rates Estimated Use of Cost Drivers Activity Cost Pool Estimated Use of Cost Drivers Activity-Based Overhead Rates Cost Assigned J 133,656 Cost Assigned T 13,365.6 Grape processing T 6000 22.276 600 22.276 Aging 3000000 T 0.106 1 T Bottling and corking 381,600 9 3,600 ololo T 0.312 600000 600000 350 318,000 187,200 142,800 107,100 T 1 1 T 3600000 300000 300000 450 Labeling and boxing 1 71,400 Maintain and inspect equipment 1 T 30 137,700 Overhead costs assigned 888,756 697,665.6 Liters produced 3000000 3000000 Overhead cost per liter x Your answer is incorrect. Try again. 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 0.341 1.728