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 cur-

rent month.

REQUIRED

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.

REQUIRED

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

LO2, 3,4 MBC 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 cur- rent month. Gas Cooker Charcoal Smoker Units .... Number of batches.. Number of batch moves Direct materials. Direct labor.... 2,000 50 90 $70,000 $44,000 8,000 20 50 $130,000 $56,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection Materials movement. Scheduling $ 68,000 19,600 43,400 $131,000 Amount of direct materials cost Number of batch moves Number of batches REQUIRED 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