Please help me understand the last two parts of the question. As much as possible please show how to do the problem, not simply the answer, so I can best understand the material.
I was able to find the product margin using the traditional costing method, but not using the activity base cost system. If it helps for the traditional costing method the product margin for Xtreme and Pathfinder is $563,200 and $511,000, respectively.
Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $138.00 $ 64.40 $ 13.50 1.5 DLHS Pathfinder $ 90.00 $ 51.00 $ 9.00 1.0 DLHS 22,000 units 73,000 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 $2,438,000 Estimated total direct labor-hours 106,000 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 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): qur: 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 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): Activities and Activity Measures Supporting direct labor (direct labor- hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Expected Activity Overhead Cost Xtreme Pathfinder Total $ 646,600 33,000 73,000 106,000 969,000 330 240 570 780,000 1 1 1 2 42,400 NA NA NA $2,438,000 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 Xtreme Palfinder Tolen Product margin $ Total Xtreme % of Amount Total Amount Pathfinder % of Amount Total Amount Amount Traditional Cost System Total cost assigned to products $ 0 $ 0 Xtreme Total % of Total Amount Pathfinder % of Amount Total Amount Amount Amount Activity-Based Costing System Direct costs: Indirect costs: Total cost assigned to products $ Costs not assigned to products: Total cost
