Question

Activity-Based Costing and Conventional Costs Compared Chef 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 3,000 Number of batches 20 10 Number of batch moves 80 20 Direct materials $30,000 $100,000 Direct labor $20,000 $29,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $299,000 Amount of direct materials cost Materials movement 16,600 Number of batch moves Scheduling 18,000 Number of batches $333,600 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (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. HINT: Use 6.8082 for overhead rate calculations. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer 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. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit

Answer 1

	Gas Cooker	Charcoal smoker	Total
Units	1000	3000
No. of batches	20	10	30
No of batches moves	80	20	100
Direct material	$30,000	100000	130000
Direct labor	20000	29000
Manufacturing overhead
Acticity	Cost		Cost driver
materials aquisition and inspection         $30,800	299000		amount of direct material cost
Material Movement                                      16,200	16600		Number of batches moved
Scheduling	18000
	333600
ANS 1
	Gas Cooker	Charcoal smoker	Total cost
Direct material	$30,000	100000
Direct labor	20000	29000
Manufacturing overhead	136164	197438
	(6.8082*20000)	(6.8082*29000)
Total cost T	$186,164	$326,438	$512,602
No. of units N	1000	3000
Cost per unit T/N	$186.16	$108.81
Total cost	$512,602
Gas cooker	$186.16
Charcoal smoker	$108.81
ans 3 Activity based
	Gas Cooker	Charcoal smoker	Total cost
Direct material	$30,000	100000
Direct labor	20000	29000
Manufacturing overhead	94280	239320
Total cost T	$144,280	$368,320	$512,600
No. of units N	1000	3000
Cost per unit T/N	$144.28	$122.77
Total cost	$512,600
Gas cooker	$144.28
Charcoal smoker	$122.77
working
Manufacturing overhead					Gas cooker		Charcoal
	Cost	Cost driver		Activity rate C/D	Cost driver	Cost assigned	Cost driver	Cost assigned
materials aquisition and inspection	299000	130000	amount of direct material cost	2.3	30000	69000	100000	230000
Material Movement	16600	100	Number of batches moved	166	80	13280	20	3320
Scheduling	18000	30	No. of batches	600	20	12000	10	6000
	333600					94280		239320