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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
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
Scheduling
18,000
$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.
(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.
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