Smoky Mountain Corporation makes two types of hikingboots%u2014Xtreme and the Pathfinder. Data concerning these twoproduct lines appear below:
Xtreme Pathfinder Selling price per unit $141 $103 Direct materials per unit $59 $45 Direct labor per unit $36 $36 Direct labor-hours per unit 3 DLHs 3 DLHs Estimated annual production 13,000 units 74,000 units
The company has a traditional costing system in which manufacturingoverhead is applied to units based on direct labor-hours. Dataconcerning manufacturing overhead and direct labor-hours for theupcoming year appear below:
Estimated total manufacturing overhead $4,332,600 Estimated total direct labor-hours 261,000 DLHs
Requirement 2: The company is considering replacing its traditional costing systemwith an activity-based costing system that would assign itsmanufacturing overhead to the following four activity cost pools(the Other cost pool includes organization-sustaining costs andidle capacity costs):
Expected Activity 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 $4,332,600
Compute the product margins for the Xtreme and the Pathfinderproducts under the activity-based costing system. (Negative amount should be indicated by a minus sign. Do not roundyour intermediate calculations. Omit the "$" sign in yourresponse.)
Xtreme Pathfinder Total Product margin $ $ $
Smoky Mountain Corporation makes two types of hikingboots%u2014Xtreme and the Pathfinder. Data concerning these twoproduct lines appear below: |
Xtreme | Pathfinder | |
Selling price per unit | $141 | $103 |
Direct materials per unit | $59 | $45 |
Direct labor per unit | $36 | $36 |
Direct labor-hours per unit | 3 DLHs | 3 DLHs |
Estimated annual production | 13,000 units | 74,000 units |
The company has a traditional costing system in which manufacturingoverhead is applied to units based on direct labor-hours. Dataconcerning manufacturing overhead and direct labor-hours for theupcoming year appear below: |
Estimated total manufacturing overhead | $4,332,600 |
Estimated total direct labor-hours | 261,000 DLHs |
|
Requirement 2: |
The company is considering replacing its traditional costing systemwith an activity-based costing system that would assign itsmanufacturing overhead to the following four activity cost pools(the Other cost pool includes organization-sustaining costs andidle capacity costs): |
Expected Activity | ||||
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 | $4,332,600 | |||
Compute the product margins for the Xtreme and the Pathfinderproducts under the activity-based costing system. (Negative amount should be indicated by a minus sign. Do not roundyour intermediate calculations. Omit the "$" sign in yourresponse.) |
Xtreme | Pathfinder | Total | |
Product margin | $ | $ | $ |