Chapter 7 Question 3
Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathnder. Data concerning these two product lines appear below: Xtrnne Pathfinder Selling price per unit 5 115.00 $ 05.00 Direct materials per unit $ 65.40 $ 53.00 Direct labor per unit 5 16.00 $ 10.00 Direct labor-hours per unit 1.6 DLHs 1-0 DLEs Estimated annual production and sales 32,000 units 60,000 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 5 1 , 779 , 200 Estimated total direct laborhours 111,200 DLHs | Required: 1. Compute the product margins for the Xtreme and the Pathnder 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 Heaeuree Overhead Coat xtreme Pathfinder Total Supporting direct labor {direct labor-hours) 5 556,000 51,200 60,000 111,200 Batch setups {setups} 710,000 430 2340 T30 Product sustaining (number of products) 400,000 1 1 2 other 53.2o_ N3. NA NA Total manufacturing overhead cost Screenshot 0 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Xtreme Pathfinder Total Product margin 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) Xtreme Pathfinder Total Product margin Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 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 Xtreme Pathfinder Total of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Indirect costs: % Screenshot% % % Total cost assigned to products Costs not assigned to products: Total cost
