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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 LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the LiteMist product. The LiteMist 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 LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company 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 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 LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist 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 Direct materials per liter Direct labor cost per liter Direct labor hours per liter Total direct labor hours Activity Cost Pools Grape processing Aging Bottling and corking Labeling and boxing Labeling and boxing LiteMist $0.40 $0.50 0.06 180,000 Cost Drivers Cart of grapes Total months Number of bottles Number of bottles Number of inspections Answer each of the following questions. $1.20 $0.90 0.07 21,000 Estimated Overhead $146,883 719,400 296,100 223,200 241,600 $1,627,183 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.) Manufacturing cost per liter CoolDay LiteMist $ $ Under ABC, prepare a schedule showing the computation of the activity-based overhead rate . (Round overhead rates to 3 decimal places, e.g. 12.250.) Activity Cost Pools Estimated Overhead Grape processing $ Expected Use of Cost Drivers Aging Bottling and corking Labeling and boxing Maintain and inspect equipme $ Prepare a schedule assigning each activity's overhead cost pool to each product, based on th Include a computation of overhead cost per liter. (Round overhead rate, cost per liter to 3 decimal places, e.g. 12.2 Activity Cost Pool Expected Use of Cost Drivers CoolDay Activity-Based Overhead Rates Grape processing $ Aging $ Bottling and corking $ Bottling and corking $ Labeling and boxing $ Maintain and inspect equipme $ Total costs assigned Liters produced Overhead cost per liter 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.) Manufacturing cost per liter CoolDay LiteMist $ $ profitability t, simple growing box than does CoolDay. antity as CoolDay. he traditional costing Expected Use of Cost Drivers per Product Expected Use of Cost Drivers 6,600 6,600,000 900,000 900,000 800 CoolDay 6,000 3,000,000 600,000 600,000 350 LiteMist 600 3,600,000 300,000 300,000 450 tal manufacturing ased overhead rates Activity-Based Overhead Rates $ per cart $ per month $ per bottle $ per bottle $ per inspection roduct, based on the use of cost drivers. ecimal places, e.g. 12.250 and cost assigned to 0 decimal places, e.g. 12,250.) Cost Assigned $ ListMist Expected Us Activity-Based Cost Drivers Overhead Rates $ $ $ $ $ $ $ Cost Assigned $ $