Activity-Based Costing and Conventional Costs Compared Chef Grill Company manufa
ID: 2525701 • Letter: A
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 10 Number of batch moves 80 20 Direct materials $50,000 $100,000 Direct labor $20,000 $28,000 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 $ 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
Explanation / Answer
Chef Grill Company
Gas Cooker
Charcoal Smoker
Direct materials
$50,000
$100,000
Direct labor
$20,000
$28,000
Manufacturing overhead at 8.4708
$169,416
$237,184
Total cost
$239,416
$365,184
Number of units
1,000
7,000
cost per unit
$239.42
$52.17
Notes –
Gas Cooker = $20,000 x 8.408 = $169,416
Charcoal Smoker = $28,000 x 8.408 = $237,184
Gas Cooker
Charcoal Smoker
Direct materials
$50,000
$100,000
Direct labor
$20,000
$28,000
Manufacturing overhead
$157,280
$249,320
Total cost
$227,280
$377,320
Number of units
1,000
7,000
cost per unit
$227.28
$53.91
Notes –
Computations –
Computation of activity rate –
Activity
Cost
Cost Driver
Activity Rate
Materials Acquisition and Inspection
$360,000
$150,000 Direct material cost
2.4
Material Movement
$16,600
100 batches
$166
Scheduling
$30,000
50 batches
$600 per batch
Note – Activity rate = cost/cost driver usage
Computation of total and per unit overhead cost:
Gas Cooker
Activity
Cost Driver
Usage
Activity rate
Overhead assigned
Materials acquisition and inspection
direct material cost
$50,000
$2.40
$120,000
Materials movement
number of moves
80
$166
$13,280
Scheduling
Batches
40
$600
$24,000
Total overhead assigned
$157,280
Number of units
1,000
Cost per unit
$157.28
Charcoal smoker
Activity
Cost Driver
Usage
Activity rate
Overhead assigned
Materials acquisition and inspection
direct material cost
$100,000
$2.40
$240,000
Materials movement
batches
20
$166
$3,320
Scheduling
number of moves
10
$600
$6,000
Total overhead assigned
$249,320
Number of units
7,000
Cost per unit
$35.62
Note – Overhead assigned = activity rate x usage
Gas Cooker
Charcoal Smoker
Direct materials
$50,000
$100,000
Direct labor
$20,000
$28,000
Manufacturing overhead at 8.4708
$169,416
$237,184
Total cost
$239,416
$365,184
Number of units
1,000
7,000
cost per unit
$239.42
$52.17
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.