Manufacturing overhead follows:

ActivityCostCost Driver

Materials acquisition and inspection ..............$30,800Amount of direct materials cost

Materials movement ...........................16,200Number of batch moves

Scheduling...................................36,000

Number of batches

$83,000

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