Question 1 of 3 > 0.83/3.33 View Policies Show Attempt History Current Attempt in Progress 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, bighi volume product called CoolDay.it sells this in 600.000 liter jag. Benton also produces and sells roughly 300.000 liters per year of a low volone, high-cost product called itemist. Lite Mistis sold in 1-liter bottles. Based on recent data, the Coolw product has not been as profitables Liteist. Management is considering dropping the inexpensive CoolDay line soit can focus more attention on the Lite Mist product. The titemist product ready demands considerably more attention than the CoolDayline 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 prohtable. It until the company started producing the more complicated Lite Mist wice that the profitability of CoolDay declined. Prior to the introduction of Liteit, the company had basement, simple growing and production procedures and Virtually no need for quality control Because iteMistis bottled in ter bottles.it requires considerably more time and effort both to bottle and to label and box than doe CoolDay. The company must bottle and handle times as many bottles of LitMit to sell the guantity as Cool CoolDay requires 1 month of aging Lite Mistrequires 1 year. CoolDay requires dearing and inspection of equipment every 10.000 liters: Liteistraires such interne every 600 liters Jackhawked the accounting otpartment to prepare an analysis of the cont per liter obling the traditional conting approach and ning activky based costice. The following information was collected Cool Lite Met Direct materials per liter 50:40 $1.20 Direct Labor cost per liter 3050 $0.90 OLDY 008 Direct labor hours per lite Total direct labor hours 210.000 24.000 Estimated Use of Cost Drivers per Product Question 1 of 3 > 0.83/3.33 ill Estimated Use of Cost Drivers per Product Estimated Use of Cost Drivers Activity Cost Pools Estimated Overhead Cost Drivers CoolDay Lite Mist Grape processing Cartof grapes $146,678 6,600 6,000 600 Aging Total months 673,200 0,600,000 3,000,000 3,600,000 Bottling and corking Number of bottles 286,200 900,000 600,000 300.000 Labeling and boxing Number of bottles 233, 100 900,000 600,000 300,000 Maintain and inspect ecruipment Number of Inspections 242,400 800 350 450 $1.581.578 Answer each of the following questions, (a) Your answer corrett Under traditional product costing using direct labor hour.compute the total manufacturing cost per liter of both products (Round answers to 3 decimal places, 12.250) CoolDay LiteM Manufacturing cost per liter 13H 2.641 1.56/3.33 III > Question 1 of 3 Your Answer Correct Answer (Used) Under ABC.prepare a schedule showing the computation of the activity based overhead rates (per cost driver). (Round overhead notes to 3 decimal places, eg, 12.250 Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rates Groe processing $ 116.675 6,600 22:21 por cart Aging 573,200 0,000,000 0.102 per month Bottling and colors 206.200 900,000 5 01310 per bottle Labeling and baine 232.100 900.000 $ 0252 per bottle Maintain and Insped 500 $ 300.000 per inspection Promeschedule which activity overhead cost pocktochroduct tused on the use of cost drivers. Includes Comutation of vied cost per liter (Round overhead rat, tot per liter to 3 decimal places, 12.950 and cost essed to O decimal places, 122501 1.56/3.33 = TII Question 1 of 3 > id Prepare a schedule assigning cach activity's overhead cost pool to each product based on the use of cost drivers. Include a computation of overhead cost per liter. (Round overhead rate, cost per liter to 3 decimal places, es 12.250 and cost assigned to o decimal places, eg 12250) CoolDay Estimated Use of Cost Drivers Activity Based Overhead Rates Activity Cost Pock Cost Assigned $ Grape processing Aging $ $ Botting and cori Labeling and bading 5 Maintain and impect equipment Overhead costs Liter produced Chad cost per To book od Medi 1 1.56/3.33 311 > Question 1 of 3 Ic Prepare a schedule assigning each activity's overhead cost pool to each product, based on the use of cost drivers, include a computation of overhead cost per liter. Round overhead rate cost per liter to 3 decimal places u. 12.250 and cost assigned to decimal places. e. 12.250) List Mist Estimated Use of Cost Drivers Activity Based Overhead Rates Cost Assigned Cost Assigned $ 5 $ 3 nTextbook and Media D 6
