* Your answer is incorrect. 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.) CoolDay Manufacturing cost per liter $ eTextbook and Media 0.2413 LiteMist 1.7257 Sunland 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. Sunland 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 Cool Day 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 Sunland, 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 Cool Day 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 Cool Day. 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 LiteMist Direct materials per liter $0.40 $1.20 Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 0.06 0.08 Total direct labor hours 180,000 24,000 Estimated Use Estimated Use of Cost Drivers per Product Estimated of Activity Cost Pools Cost Drivers Overhead Cost Drivers CoolDay LiteMist Grape processing Cart of grapes $158,400 6,600 6,000 600 Aging Total months 495,000 6,600,000 3,000,000 3,600,000 Bottling and corking Number of bottles 280,800 900,000 600,000 300,000 Labeling and boxing Number of bottles 235,800 900,000 600,000 300,000 Maintain and inspect Number of 242,400 800 350 450 equipment inspections Answer each of the following questions. * Your answer is incorrect. $1,412,400 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.) CoolDay Manufacturing cost per liter $ 1.078 LiteMist 2.471 Your answer is partially correct. Under ABC, prepare a schedule showing the computation of the activity-based overhead rates (per cost driver). (Round overhead rates to 3 decimal places, e.g. 12.250.) Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers Grape 145,860 6,600 processing Aging 396,000 6,600,000 Bottling and 270,000 900,000 corking Labeling and 189,000 900,000 boxing Maintain and inspect 240,800 800 equipment 6+ eTextbook and Media 1,241,660 +A +A +A +A Activity-Based Overhead Rates 22.10 per cart 0.06 per month 0.30 per bottle 0.21 per bottle per 301.00 inspection Activity Cost Pool Grape processing Aging Bottling and corking Labeling and boxing Maintain and inspect equipment Overhead costs assigned Liters produced Overhead cost per liter Use of Cost Drivers 6000 LA $ 3000000 600000 600000 LA $ CoolDay Activity-Based Overhead Rates 22.10 0.06 +A $ Cost Assigned 132,600 180,000 LA $ 0.30 180,000 LA $ 0.21 126,000 350 $ LA 301.00 +A +A 105,350 723,950 3000000 423,950 +A 132,600 Use of Cost Drivers 600 Cost Assigned +A +A 180,000 3600000 180,000 300000 126,000 300000 105,350 723,950 3000000 423,950 450 +A +A ListMist Activity-Based Overhead Rates 22.10 $ $ 0.06 Cost Assigned 13,260 216,000 +A $ 0.30 90,000 +A +A 0.21 63,000 301.00 +A EA 135,450 517,710 300000 217,710