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C is a bit longer so I have to expand it sideways. All I need is D. Thanks! Benton Corporation produces two grades of non-alcoholic
C is a bit longer so I have to expand it sideways. All I need is D. Thanks!
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. CoolDay $0.40 $0.50 Direct materials per liter Direct labor cost per liter Direct labor hours per liter Total direct labor hours Lite Mist $1.20 $0.90 0.07 0.06 180,000 21,000 Estimated Use of Cost Drivers per Product Estimated Overhead Estimated Use of Cost Drivers Lite Mist 600 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 $146,883 719,400 296,100 223,200 6,600 6,600,000 900,000 900,000 CoolDay 6,000 3,000,000 600,000 600,000 3,600,000 300,000 300,000 241,600 800 350 450 $1,627,183 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 $ 1.386 2.667 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-Based Overhead Rates Grape processing $ 146883 6600 22.255 per cart Aging per 719400 6600000 $ 0.109 month 296100 900000 $ 0.329 per bottle 223200 900000 $ 0.248 per bottle Bottling and corking Labeling and boxing Maintain and inspect equipment 241600 800 302 per inspection $ 1627183 (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.) Estimated Use of Cost Drivers CoolDay Activity-Based Overhead Rates Activity Cost Pool Cost Assigned Grape processing 6,000 $ 22.255 $ 133,530 Aging 3,000,000 $ 0.109 327,000 Bottling and corking 600,000 $ 0.329 197,400 Labeling and boxing 600,000 $ 0.248 148,800 Maintain and inspect equipment 350 $ 302 105,700 Overhead costs assigned $ 912,430 Liters produced 3,000,000 Overhead cost per liter $ 0.304 (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 Cost Assigned $ 133,530 600 $ 22.255 $ 13,353 327,000 3,600,000 $ 0.109 392,400 197,400 300,000 $ 0.329 98,700 148,800 300,000 $ 0.248 74,400 105,700 450 $ 302 135,900 $ 912,430 $ 714,753 3,000,000 300,000 $ 0.304 $ 2.383 (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 SubmitStep by Step Solution
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