Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfi
ID: 2490226 • Letter: S
Question
Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:
Xtreme
Pathfinder
Selling price per unit
$
116.00
$
80.00
Direct materials per unit
$
64.00
$
52.00
Direct labor per unit
$
12.00
$
8.00
Direct labor-hours per unit
1.5
DLHs
1.0
DLHs
Estimated annual production and sales
29,000
units
76,000
units
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:
Estimated total manufacturing overhead
$1,912,000
Estimated total direct labor-hours
119,500 DLHs
Required:
1.
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Do not round your intermediate calculations.)
Xtreme
Pathfinder
Total
Product Margin
$
Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:
Explanation / Answer
Product Margin- Traditional
Particulars
Xactive
Pathbreaker
Total
Sales
29000*116
$ 3,364,000.00
76000*80
$6,080,000.00
$ 9,444,000.00
Direct materials
29000*64
$ 1,856,000.00
76000*52
$3,952,000.00
$ 5,808,000.00
Direct labor
29000*12
$ 348,000.00
76000*8
$608,000.00
$ 956,000.00
Manufacturing overhead(applied @ $20.00 per direct labor-hour)
29000*1.5*16
$ 696,000.00
76000*1.0*16
$1,216,000.00
$ 1,912,000.00
Total manufacturing cost
$ 2,900,000.00
$5,776,000.00
$ 8,676,000.00
Product margin
$ 464,000.00
$304,000.00
$ 768,000.00
Estimated total manufacturing overhead
$ 1,912,000.00
Estimated total direct labor-hours
119500
DLHs
Manufacturing Overhead per direct labour hour
$16.00
Per DLHs
Product Margin- Traditional
Particulars
Xactive
Pathbreaker
Total
Sales
29000*116
$ 3,364,000.00
76000*80
$6,080,000.00
$ 9,444,000.00
Direct materials
29000*64
$ 1,856,000.00
76000*52
$3,952,000.00
$ 5,808,000.00
Direct labor
29000*12
$ 348,000.00
76000*8
$608,000.00
$ 956,000.00
Manufacturing overhead(applied @ $20.00 per direct labor-hour)
29000*1.5*16
$ 696,000.00
76000*1.0*16
$1,216,000.00
$ 1,912,000.00
Total manufacturing cost
$ 2,900,000.00
$5,776,000.00
$ 8,676,000.00
Product margin
$ 464,000.00
$304,000.00
$ 768,000.00
Estimated total manufacturing overhead
$ 1,912,000.00
Estimated total direct labor-hours
119500
DLHs
Manufacturing Overhead per direct labour hour
$16.00
Per DLHs
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