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

Question

Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. 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 121.00 $ 65.30 S 13.50 $ 86.00 $ 52.00 $ 9.00 1.5 DLHs 1.0 DLHs 65,000 units 31,000 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 $2,230,000 111,500 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 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 Overhead Cost $ 724,750 treme Pathfinder Total Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost 46,500 65,000 111,500 750 330 975,000 470,000 420 NA NA NA Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative product margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.) Pathfinder Total Xtreme Product Margin

Explanation / Answer

1.

2.

3.

Working:

Activity based costing:

X treme Pathfinder Total Product margin 378200 325000 703200 Estimated total manufacturing overhead 2230000 Estimated total direct labor hours 111500 Predetermined overhead rate per dirct labor hour 20 Xtreme Pathfinder Per unit Per unit Direct labor hours 1.50 1.00 Selling price 121.00 86.00 Costs: Direct material 65.30 52.00 Direct labor 13.50 9.00 Mnufacturing overhead ($20 per direct labor hour) 30.00 20.00 Total cost 108.80 81.00 Product margin 12.20 5.00 Estimated annual production and sales units 31000 65000 Total product margin 378200 325000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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