Please see the image for questions. Accounting for Management. I need answers/so

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Please see the image for questions. Accounting for Management. I need answers/solutions to all questions. Thanks!

12/4/2017 Assignment Print View 8 Award: 20.00 points Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual $ 121.00 $ 64.70 $ 10.80 $ 88.00 $ 54.00 $9.00 1.2 DLHs 1.0 DLHs 71,000 units n and sales The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerming manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours 2,020,000 101,000 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 360 NA 101,000 630 $ 606,000 30,000 71,000 270 21,000 $ 2,020,000 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 Computation of product margin: Xtreme Pathfinder Selling price per unit (a) 121 88 Less: Manufacturing costs Direct materials per unit 64.7 54 Direct labor per unit 10.8 9 Manufacturing overhead per unit (Note:1) 24 20 (b) 99.5 83 Product margin (a)-(b) 21.5 5 Estimeted annual production 25000 71000 Total product margin 537500 355000 Notes: 1. computation of manufactuing overhead Manufacturing overhead rate=Estimated total manufacturing overhead/Estimated total direct labor hours=2020000/101000=$20 per hour Manufacturing overhead per unit=Direct labor-hours per unit*Manufacturing overhead rate Xtreme=1.2*20=24 Pathfinder=1*20=20 2 Computation of product margin: Xtreme Pathfinder Selling price per unit (a) 121 88 Less: Manufacturing costs Direct materials per unit 64.7 54 Direct labor per unit 10.8 9 Manufacturing overhead per unit 37.04 15.11 (Note:2) (b) 112.54 78.11 Product margin (a)-(b) 8.46 9.89 Estimated annual production 25000 71000 Total product margin 211500 702190 Notes: 2. Computation of manufacturing overhead: Activity Estimated overhead cost Xtreme Pathfinder Supporting direct labor 606000 180000 426000 (allocate in 30:71) (606000*30/101) (606000*71/101) Batch setups 693000 396000 297000 (allocate in 36:27) (693000*36/63) (693000*27/63) Product sustaining 700000 350000 350000 (allocate in 1:1) Total manufacturing overhead 926000 1073000 Estimated annual sales units 25000 71000 manufacturing overhead per unit 37.04 15.11 3 Quantitative comparison of traditional and activity-based cost assignments: Xtreme Pathfinder % of % of Total Amount total amount Amount total amount Amount Estimated annual production 25000 71000 Traditional cost system: Direct materials 1617500 29.67% 3834000 70.33% 5451500 (25000*64.70) (71000*54) Direct labor 270000 29.70% 639000 70.30% 909000 (25000*10.80) (71000*9) Manufacturing overhead 600000 29.70% 1420000 70.30% 2020000 (25000*24) (71000*20) Total costs assigned to products 2487500 5893000 8380500 Activity-based cosing system Direct materials 1617500 29.67% 3834000 70.33% 5451500 (25000*64.70) (71000*54) Direct labor 270000 29.70% 639000 70.30% 909000 (25000*10.80) (71000*9) Manufacturing overhead : Supporting direct labor 180000 29.70% 426000 70.30% 606000 Batch setups 396000 57.14% 297000 42.86% 693000 Product sustaining 350000 50.00% 350000 50.00% 700000 Total costs assigned to products 2813500 5546000 8359500 Costs not assigned to products Other 21000 Total cost 8380500

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