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Problem 5-17 (Algo) Comparing Traditional and Activity-Based Product Margins (LO5-1, L05-3, LO5-4, LO5-5] Smoky Mountain Corporation makes two types of hiking boots--the Xtreme and the
Problem 5-17 (Algo) Comparing Traditional and Activity-Based Product Margins (LO5-1, L05-3, LO5-4, LO5-5] Smoky Mountain Corporation makes two types of hiking boots--the 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 $ 116.89 64.00 $ 12.09 1.5 DLHS 29,000 units $ Pathfinder 80.80 52.60 8.00 1.0 DLHS 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 Estimated total direct labor-hours $ 1,912,800 119,500 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): Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining number of products) Other Total manufacturing overhead cost Estimated Overhead Cost $ 693,100 539.000 640,000 39,900 $ 1,912,000 Expected Activity Xtreme Pathfinder Total 43,500 76,000 119,500 290 200 490 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 Product margin Required 2 > 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.) Pathfinder of ol Amount Total Amount Amount Total Amount Amount Traditional Cost System Total cost assigned to products Total Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs Indirect costs Total cost assigned to products Costs not assigned to products Total cost
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