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

Gas CookerCharcoal Smoker

Units2,0008,000

Number of batches5020

Number of batch moves180100

Direct materials$72,000$128,000

Direct Labor$44,000 $56,000

Details of manufacturing overhead for the month of January consisted of:

ActivityCostCost Driver

Materials acquisition& inspection $70,000Direct materials cost

Materials movement 19,600Number of batch moves

Scheduling43,400Number of batch

$133,000

In addition, the facility level costs (plant maintenance, rent and supervisory salaries) for the month was $17,000.

A.Assuming that all the manufacturing overhead, using the conventional method, is assigned on the basis of number of units produced. For the month of January, what is the total cost of manufacturing the Gas Cooker? And the Charcoal Smoker?

B.Assuming that all manufacturing overhead is is assigned on the basis of activity-based costing. For the month of January, what is the total cost of manufacturing the Gas Cooker? And the Charcoal Smoker? The controller has suggested that the facility-level costs can still be allocated using the number of units produced.

C.What is the per unit cost of Gas Cooker and Charcoal Smoker under the conventional and the activity-based costing method? Explain why the per unit cost changed under the two costing methods. Which method will you recommend to the management of Hickory Grill Company?

D.Hickory Farm operates in a competitive market and prices its product with a 25% markup over cost, determined using the conventional method. Assuming that the Hickory is still operating within the relevant range, what will be the impact of selling additional 1,000 units of Gas Cooker on the overall profitability of the company?