Question

Activity-Based Costing and Conventional Costs Compared Hickory Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 5,000 Number of batches 50 10 Number of batch moves 80 20 Direct materials $80,000 $140,000 Direct labor $20,000 $25,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $70,800 Amount of direct materials cost Materials movement 16,200 Number of batch moves Scheduling 36,000 Number of batches $123,000 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. Round rate to four decimal places, if applicable. Manufacturing overhead based on direct labor dollars: $Answer per direct labor dollar Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit Gas Cooker Charcoal Smoker Direct materials $ $ Direct labor Manufacturing overhead: Total cost $ $ Units Cost per unit $ $ 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. Round answers to two decimal place, if needed. Activity-based overhead rates: Materials acquisition and handling $Answer per direct material dollar Materials movement $Answer per move Scheduling $Answer per batch Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit Gas Cooker Charcoal Smoker Direct materials $ $ Direct labor Manufacturing overhead: Materials acquisition Materials movement Scheduling Total cost per batch $ $ Number of units per batch Cost per unit $ $

Answer 1

1.

	Gas cooker	Charcoal smoker
Direct material	$80,000	$140,000
Direct labor	20,000	25,000
Manufacturing overhead	54,667 (123,000*20,000/45,000)	68,333 (123,000*25,000/45,000)
Total cost	$154,667	$233,333
Units	1,000	5,000
Cost per unit	$154.67	$46.67

2.

	Gas Cooker	Charcoal Smoker
Direct material	$80,000	$140,000
Direct labor	20,000	25,000
Manufacturing overhead	68,705	54,295
Total manufacturing cost	$168,705	$219,295
Units	1,000	5,000
Cost per unit	$168.71	$43.86

Working note:

Manufacturing overhead:

Activity	Cost driver		Gas cooker	Charcoal smoker
Material acquisition and inspection	Direct material cost (80:140)	$70,800	$25,745	$45,055
Materials movement	Number of batch moves (80:20)	16,200	12,960	3,240
Scheduling	Number of batches (50:10)	36,000	30,000	6,000
Total		$123,000	$68,705	$54,295