Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pa

Question

Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Pathfinder $ 91.00 $ 50.00 $ 8.00 Xtreme Selling price per uni-t Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales 130.00 $ 64.30 s11.20 1.4 DLHs 1.0 DLHs 21,000 units 72,000 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 overhea Estimated total direct labor-hours $2,230,800 101,400 DLHs Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system 2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs) Estimated Expected Activity Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Overhead Cost Xtreme Pathfinder Total $ 699,660 29,400 72,000 230 101,400 550 660,000 780,000 91,140 $2,230,800 320 NA NA NA Total manufacturing overhead cost Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Explanation / Answer

1.

*Predetermined overhead rate = $2230800/101400 DLH = $22 per DLH

2.

3.

Xtreme Pathfinder Total Product margin 497700 792000 1289700

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.