Polzin Corporation

Polzin Corporation produces two grades of 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. Polzin also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the LiteMist product. The LiteMist product already demands considerably more attention than the CoolDay line. Greg Kagen, president and founder of Polzin, 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 LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple 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 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters. Greg 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 LiteMist   Direct materials per liter $0.40   $1.20     Direct labor cost per liter $0.25   $0.50     Direct labor hours per liter 0.05   0.09     Total direct labor hours 150,000   27,000     Activity Cost Pool Cost Driver Estimated Overhead Expected Use of Cost Drivers Expected Use of Cost Drivers per Product CoolDay LiteMist Grape processing   Cart of grapes $145,860   6,600   6,000   600   Aging   Total months 396,000   6,600,000   3,000,000   3,600,000   Bottling and corking   Number of bottles 270,000   900,000   600,000   300,000   Labeling and boxing   Number of bottles 189,000   900,000   600,000   300,000   Maintain and inspect equipment   Number of inspections 240,800   800   350   450         $1,241,660                

Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products.
(Round computations and final answers to 3 decimal places, e.g. 2.250.)