Question 3. Rocky Mountain Corporation makes two types of hiking bootsXactive and

Pathbreaker. Data concerning these two product lines appear below:

The company has a conventional 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:

Required:

(a) Compute the predetermined overhead rate based on direct labor-hours. Using this rate and other data from the problem, determine the unit product cost of each product.

(b) The company is considering replacing its conventional costing system with an activity- based costing system that would assign its manufacturing overhead to the following four activity cost pools:

Determine the activity rate for each of the four activity cost pools.

(c) Using the activity rates and other data from the problem, determine the unit product cost of each product.

(d) Explain why the conventional and activity-based cost assignments differ.

activities and activity measures	estimated overheadcost	xactive	pathbreaker	total
DL hours	797500	35000	75000	110000
bath setups	680000	250	150	400
number of product	650000	1	1	2
machine hours	72500	2500	7500	10000
total MOH	2200000

Estimated total manufacturing overhead $2,200,000 110,000 DLHs