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Benton Corporation produces two grades of non-alcoholic wine from grapes that it buys from California growers. It produces and sells roughly 3.000.000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,000 5-liter jugs Benton also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called Lite Mist. Lite Mist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as Lite Mist. Management is considering dropping the inexpensive CoolDayline so it can focus more attention on the Lite Mist product. The Lite Mist product already demands considerably more attention than the CoolDayline. Jack Eller, president and founder of Benton, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line and that it was always quite profitable. It wasn't until the company started producing the more complicated Lite Mist wine that the profitability of CoolDay declined. Prior to the introduction of Lite Mist, the company had basic equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-liter bottles, it requires considerably more time and effort, both to bottle and to label and box than does CoolDay. The company must bottle and handle times as many bottles of Lite Mist to sell the same quantity as CoolDay, CoolDay requires 1 month of aging: Lite Mist requires 1 year CoolDay requires cleaning and inspection of equipment overy 10,000 liters, Lite Mist requires such maintenance every 600 liters Jack has asked the accounting department to prepare an analysis of the cost per liter using the traditional costing approach and using activity-based costing. The following information was collected CoolDay Lite Mist Direct materials per liter $0.40 $1.20 Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 0.06 0.07 Direct labor cost per liter $0.50 $0.90 Direct labor hours per liter 006 007 Total direct labor hours 180.000 21,000 Estimated Use of Cost Drivers per Product Estimated Use of Cost Drivers Estimated Overhead Activity Cost Pools Cost Drivers CoolDay Lite Mist Grape processing Cartof grapes $146.685 6,600 6,000 600 Aging Total months 495,000 6,600,000 3,000,000 3,600,000 Bottling and corking Number of bottles 309,600 900,000 600.000 300,000 Labeling and boxing 201.600 900,000 600,000 300,000 Maintain and inspect equipment Number of bottles Number of inspections 241,600 800 350 450 $1,394485 Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products, (Round answers to 3 decimal places, eg. 12.250.) CoolDay Lite Mist Manufacturing cost per liter $

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