Smoky Mountain Corporation makes two types of hiking bootsâXtreme and the Pathfinder. Data concerning these two product lines appear below:
Xtreme Pathfinder Selling price per unit $ 120.00 $ 87.00 Direct materials per unit $ 63.30 $ 52.00 Direct labor per unit $ 17.00 $ 10.00 Direct labor-hours per unit 1.7 DLHs 1.0 DLHs Estimated annual production and sales 22,000 units 76,000 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 $1,927,800 Estimated total direct labor-hours 113,400 DLHs
Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the companyâs traditional costing system. (Do not round your intermediate calculations.)
Xtreme Pathfinder Total Product margin $
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 Overhead Cost Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $ 703,080 37,400 76,000 113,400 Batch setups (setups) 480,000 220 180 400 Product sustaining (number of products) 700,000 1 1 2 Other 44,720 NA NA NA Total manufacturing overhead cost $ 1,927,800
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.)
Xtreme Pathfinder Total Product margin $
| Smoky Mountain Corporation makes two types of hiking bootsâXtreme and the Pathfinder. Data concerning these two product lines appear below: |
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 120.00 | $ | 87.00 | ||
| Direct materials per unit | $ | 63.30 | $ | 52.00 | ||
| Direct labor per unit | $ | 17.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.7 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 22,000 | units | 76,000 | 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 | $1,927,800 | ||
| Estimated total direct labor-hours | 113,400 DLHs | ||
| Required: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Compute the product margins for the Xtreme and the Pathfinder products under the companyâs traditional costing system. (Do not round your intermediate calculations.)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related questions
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 hikingbootsâXtreme and the Pathfinder. Data concerning these two productlines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 124.00 | $ | 88.00 | ||
| Direct materials per unit | $ | 63.40 | $ | 53.00 | ||
| Direct labor per unit | $ | 14.40 | $ | 8.00 | ||
| Direct labor-hours per unit | 1.8 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 23,000 | units | 70,000 | units | ||
The company has a traditional costing system in whichmanufacturing overhead is applied to units based on directlabor-hours. Data concerning manufacturing overhead and directlabor-hours for the upcoming year appear below: |
| Estimated total manufacturing overhead | $2,005,200 | ||
| Estimated total direct labor-hours | 111,400 DLHs | ||
| Required: | |
| 1. | Compute the product margins for the Xtreme and the Pathfinderproducts under the companyâs traditional costing system.(Do not round your intermediate calculations.) |
| 2. | The company is considering replacing its traditional costingsystem with 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): |
| Estimated | Expected Activity | ||||
| Activities and Activity Measures | Overhead Cost | Xtreme | Pathfinder | Total | |
| Supporting direct labor (direct labor-hours) | $ | 712,960 | 41,400 | 70,000 | 111,400 |
| Batch setups (setups) | 504,000 | 230 | 190 | 420 | |
| Product sustaining (number of products) | 740,000 | 1 | 1 | 2 | |
| Other | 48,240 | NA | NA | NA | |
| Total manufacturing overhead cost | $ | 2,005,200 | |||
Compute the product margins for the Xtreme and the Pathfinderproducts under the activity-based costing system. (Negativeproduct margins should be indicated with a minus sign. Round yourintermediate calculations to 2 decimal places.) |
| 3. | Prepare a quantitative comparison of the traditional andactivity-based cost assignments. (Do not round intermediatecalculations. Round your "Percentage" answer to 1 decimal place.(i.e. .1234 should be entered as 12.3)) |
