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M Homework Ch 7 f Liezto.mheducation.com/hm.tpx :: Apps M Watch movies online YouTube G Google Google Translate -Electronics, Cars, Fash Bank PCCC News 3 NBA.com N Netflix eChegg com Other bookmarks 2.00 points Rocky Mountain Corporation makes two types of hiking boots-Xactive and the Pathbreaker. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xactive $120.00 $ 64.10 $ 13.50 Pathbreaker $ 90.00 $ 53.00 $ 9.00 1.5 DLHs 30,000 units 1.0 DLHs 70,000 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 Estimated total direct labor-hours $2,300,000 115,000 DLHs Required 1. Compute the product margins for the Xactive and the Pathbreaker products under the company's traditional costing system. (Loss amounts should be indicated with a minus sign. Omit the "$" sign in your response.) Total 932000 Xactive Pathbreaker 560000$ Product margin 372000 $ 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 Overheacd Cost Expected Activit Activities and Activity Measures Xactive Pathbreaker Total tina direct labor (direct labor-hours 5 000 70 00n 5 000 IEE: 10:06 AM 4/29/2016 I'm Cortana. Ask me anything

Explanation / Answer

Part 1)

The overhead rate under traditional costing is $20 (2,300,000/115,000) per direct labor hour.

The product margin under traditional costing system is calculated as follows:

_________

Part 2)

The activity rates are calculated with the use of following table:

The product margin under activity based costing system is calculated as follows:

_________

Part 3)

The quantitative comparision is given below:

Xactive Pathbreaker Total Sales Value 3,600,000 6,300,000 9,900,000 Less Variable Costs 0 Direct Material 1,923,000 3,710,000 5,633,000 Direct Labor 405,000 630,000 1,035,000 Manufacturing Overhead 900,000 1,400,000 2,300,000 Product Margin $372,000 $560,000 $932,000

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