Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: theGas Cooker and the Charcoal Smoker. The Cooker is a premium productsold in upscale outdoor shops; the Smoker is sold in major discountstores. Following is information pertaining to the manufacturingcosts for the current month.
| Gas Cooker | Charcoal Smoker |
|---|
| Units | 1,000 | 7,000 |
| Number of batches | 40 | 10 |
| Number of batch moves | 80 | 20 |
| Direct materials | $50,000 | $100,000 |
| Direct labor | $20,000 | $28,000 |
Manufacturing overhead follows:
| Activity | Cost | Cost Driver |
|---|
| Materials acquisition and inspection | $360,000 | Amount of direct materials cost |
| Materials movement | 16,600 | Number of batch moves |
| Scheduling | 30,000 | Number of batches |
| $406,600 | |
Rounding instructions: Do not round until yourfinal answers. Round total cost answers to the nearest dollar andper unit answers to the nearest cent.
(a) Determine the total and per-unit costs of manufacturing theGas Cooker and Charcoal Smoker for the month, assuming allmanufacturing overhead is assigned on the basis of direct labordollars.
HINT: Use 8.4708 for overhead ratecalculations.
| Total cost | $Answer | |
| Gas Cooker | $Answer | per unit |
| Charcoal Smoker | $Answer | per unit |
(b) Determine the total and per-unit costs of manufacturing theGas Cooker and Charcoal Smoker for the month, assumingmanufacturing overhead is assigned using activity-basedcosting.
| Total cost | $Answer | |
| Gas Cooker | $Answer | per unit |
| Charcoal Smoker | $Answer | per unit |
