Selling price per unit : $141, $103 Direct materials per unit : $59, $45 Direct

Question

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

Expected Activity:

Activities & Measures Est.Over.Cost Xtreme Pathfinder Total

Support direct labor $1860930 39000 222000 261000

Batch setups 468900 110 190 300

Prod. sustain 555800 1 3 4

Other 1446970 NA NA NA

Total manu.over.cost $4332600

*Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Predetermined Overhead Rate = Estimated total manufacturing overhead/Estimated total direct labor-hours = 4332600/261000 = 16.60

Part B:

Part C:

Quantitative Comparision

Thanks.

Profit Margins Under Traditional Costing
Xtreme Pathfinder Sales 1833000 7622000 Less Direct Materials 767000 3330000 Direct Labor 455000 2590000 Manufacturing Overhead 647400 3685200 Profit Margins -36400 -1983200

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