Activity-based costing and conventional costs compared chef

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 1000 7000     Number of batches 40 10     Number of batch moves 80 20     Direct materials 50000 100000     Direct labor 20000 28000     Manufacturing overhead follows:         Activity Cost Cost Driver     Materials acquisition and inspection 360000

Amount of direct materials cost

    Materials movement 16600 Number of batch moves     Scheduling 30000 Number of batches       406600                

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.        

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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