E18-22. Activity-Based Costing and Conventional Costs Compared

Hickory Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month

Manufacturing overhead follows:

a. Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

b. Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.

E18-23. Activity-Based Costing Versus Conventional Costing

Refer to the previous exercise in E18-22 for Hickory Grill.

a. Comment on the differences between the solutions to requirements (a) and (b). Which is more accurate? What errors might managers make if all manufacturing overhead costs are assigned on the basis of direct labor dollars?

b. Hickory Grills manufacturing process has become increasingly automated over the past few years. Discuss how this will likely impact its ability to accurately measure product costs.

c. Comment on the adequacy of the preceding data to meet managements needs

Can someone provide the answers accordingly based on the given question? Thank you. I will rate it if it is correct:-)

Gas Cooker Charcoal Smoker Units.... 2,000 50 90 $70,000 $44,000 8,000 20 50 $130,000 $56,000 Activity Cost Cost Driver Amount of direct materials cost Number of batch moves Number of batches Materials acquisition and inspection . $68,000 19,600 43,400 $131,000