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1. Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling

1.

Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below:

Xtreme Pathfinder
Selling price per unit $ 130.00 $ 91.00
Direct materials per unit $ 64.30 $ 50.00
Direct labor per unit $ 11.20 $ 8.00
Direct labor-hours per unit 1.4 DLHs 1.0 DLHs
Estimated annual production and sales 21,000 units 72,000 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 $ 2,230,800
Estimated total direct labor-hours 101,400 DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the companys 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 Overhead Cost Expected Activity
Activities and Activity Measures Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 699,660 29,400 72,000 101,400
Batch setups (setups) 660,000 320 230 550
Product sustaining (number of products) 780,000 1 1 2
Other 91,140 NA NA NA
Total manufacturing overhead cost $ 2,230,800

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.

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Complete LNIS question by entering your anSwers m the tabs belovw. Required 1 Required Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Ro your intermediate calculations to 2 decimal places.) Xtreme Pathfinder Total Product margin $1,213,200 $ 1,213,200 Required 3 Requ Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calcu decimal places and "Percentage" answers to 1 decimal place.) Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System % % Total cost assigned to products 0 0 0 Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % Indirect costs: % Activity-Based Costing System Direct costs: % Indirect costs % % Total cost assigned to products Costs not assigned to products: Total cost Required 2 Required 3 EA

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