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 7,000 Number of batches 40 Number of batch moves 80 Direct materials $50,000 $100,000 Direct labor $20,000 $28,000 10 20 Support 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 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 8.4708 for overhead rate calculations. Total cost $ 604,600 Gas Cooker $ 0 x per unit Charcoal Smoker $ 0x per unit

Answer 1

Overhead rate = Total estimated manufacturing overhead/Total direct labor cost Overhead rate = (406600/(20000-28000)) Overhead rate per direct labor dollar is = $ 8.4708/. Total Determination of total and per unit costs Charcol Particulars Gas Cooker Smoker Direct materials 50,000 100,000 Direct labor 20,000 28,000 Manufacuring overhead 169,417 237,183 (20000*8.4708) (28000*8.4708) Total cost 239,417 365,183 No of units 1,000 7,000 Per unit cost 239.42 52.17 150,000 48,000 406,600 604,600