Smoky Mountain Corporation makes two types of hiking boots%u2014Xtreme and the P

Question

Smoky Mountain Corporation makes two types of hiking boots%u2014Xtreme and the Pathfinder. Data concerning these two product lines appear below.

1,446,970

$4,332,600

Compute the product margins for the $Xtreme and the $Pathfinder products under the activity-based costing system.

Selling price per unit : $141, $103
Direct materials per unit : $59, $45
Direct labor per unit : $35, $35
Direct labor-hours per unit : 3DLH, 3DLH
Estimated annual production : 13000 units, 74000 units
Estimated total manufacturing overhead : $4332600
Estimated total direct labor-hours : 261000 DLH

Requirement 1:
(A) Calculate the predetermined overhead rate $$$. (Round your answer to 2 decimal places)

(B) Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Negative amount should be indicated by a minus sign. Round your predetermined overhead rate to 2 decimal places. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

Xtreme Pathfinder Total
Product margin $$$

Requirement 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):

Activities and Activity Measures Estimated
Overhead cost Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $1,860,930 39,000    222,000    261,000      Batch setups (setups) 468,900 110    190    300      Product sustaining (number of products) 555,800 1    3    4      Other

1,446,970

NA    NA    NA      Total manufacturing overhead cost

$4,332,600

Explanation / Answer

Hi,

Please find the revised answers as per Direct Labor Cost of 36 pe hour:

Thanks.

Profit Margins Under Traditional Costing
Xtreme Pathfinder Sales 1833000 7622000 Less Direct Materials 767000 3330000 Direct Labor 468000 2664000 Manufacturing Overhead 647400 3685200 Profit Margins -49400 -2057200

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