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
|
40
|
10
|
|
Number of batch moves
|
80
|
40
|
|
Direct materials
|
$40,000
|
$100,000
|
|
Direct labor
|
$22,000
|
$27,000
|
Manufacturing overhead follows:
|
Activity
|
Cost
|
|
Materials acquisition and inspection
|
$30,800
|
|
Materials movement
|
16,200
|
|
Scheduling
|
36,000
|
| |
$83,000 |
Required
hint use 1.6939 for overhead rate calculations
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.