Queste View Policies Current Attempt in Progress Sheridan 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. Sheridan also produces and sells roughly 300,000 liters per year of a low volume, high-cost product called LiteMist. Lite Mist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as Lite Mist. Management is considering dropping the inexpensive CoolDayline so it can focus more attention on the Lite Mist product. The LiteMist product already demands considerably more attention than the CoolDay line. Jack Eller, president and founder of Sheridan, 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 Lite Mist wine that the profitability of CoolDay declined. Prior to the introduction of Lite Mist, 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: Lite Mist 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 activity-based costing. The following information was collected. CoolDay Lite Mist Direct materials per liter $0.40 $1.20 Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 0.07 0.12 Total direct labor hours 210,000 36,000 Estimated Use of Cost Drivers per Product Estimated Overhead Estimated Use of Cost Drivers Activity Cost Pools Cost Drivers CoolDay Lite Mist Grape processing 6,600 6,000 600 $ 150,480 752.400 Aging 6,600,000 3,000,000 3,600,000 297,000 900,000 600.000 300,000 Cart of grapes Total months Number of bottles Number of bottles Number of inspections Bottling and corking Labeling and boxing Maintain and inspect equipment 212,400 900,000 600.000 300,000 244,000 800 350 450 $1,656,280 Answer each of the following questions. Answer each of the following questions. (a) Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products. (Round answers to 3 decimal places, es 12.250.) CoolDay LiteMist Manufacturing cost per liter $ eTextbook and Media Save for Later Attempts: 0 of 1 used Submit Answer 3 etv RA A Ps C