Please help me solve the third part of this question on Comparing Traditional and Activity-Based Product Margins! I have the first two parts finihsed but I need help with the third.
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 $ 123.00 $ 86.00 Direct materials per unit $ 63.80 $ 50.00 Direct labor per unit $ 10.80 $ 9.00 Direct labor-hours per unit 1.2 DLHs 1.0 DLHs Estimated annual production and sales 27,000 units 74,000 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 laborhours for the upcoming year appear below: Estimated total manufacturing overhead $ 2 , 340 , 800 Estimated total direct labor-hours 106 , 4 0 0 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 activitybased 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 laborhours) $ 691, 600 32,400 74, 000 106,400 Batch setups (setups) 900,000 270 230 500 Product sustaining (number of products) 700 , 000 1 1 2 Other 49 , 2 00 NA NA NA Total manufacturing overhead cost $ 2 , 340, 800 [ Compute the product margins for the Xtreme and the Pathfinder products under the activitybased costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. ! Required 1 E Required 2 Required 3 Compute the product margins for the Xtreme and the Pathnder products under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and nal answers to the nearest whole dollar amount.) Product margin $ 594,000 $ 370,000 $ 964,000 Requiredl E Requiredz E Required3 Compute the product margins for the Xtreme and the Pathnder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) PmdUCtma'g'" 245472200 370 357 000 615,829,200 Required 1 Required 2 E Required 3 E Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your interme decimal places.) __I__I_ II_-___ II_-___ II_-___ __I__Ig Activity-Based Costing System Direct costs: 32 Direct materials 3'1 Direct labor Indirect costs: 3'3 Supporting direct labor 32 Batch setups 32 Product sustaining Total cost assigned to products Costs not assigned to products: Other Total cost
