Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfi

Question

Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:

   

   

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

    

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3))

     

      

      

Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3)) Xtreme Pathfinder Total %of %of Amount Total A mount Amo Am ount Total Amount Amount Traditional Cost System Direct labor Direct materials Manufacturing overhead Total cost assigned to products 0

Explanation / Answer

Solution:

Xtreme Pathfinder Total % of Total Amount % of Total Amount Amount Amount Amount Traditional Cost System Direct Labor       1,524,000 60.19%               3,834,000 65.85%         5,358,000 Direct Materials           324,000 12.80% 639,000 10.98%            963,000 Manufacturing overhead           684,000 27.01%               1,349,000 23.17%         2,033,000 Total cost assigned to products       2,532,000 100.00%               5,822,000 100.00%         8,354,000

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