Question
Rocky Mountain Corporation makes two types of hiking bootsXactive and Pathbreaker. Data concerning these two product lines appear below: XactivePathbreakerDirect materials per unit$64.60$50.80Direct labor cost
Rocky Mountain Corporation makes two types of hiking bootsXactive and Pathbreaker. Data concerning these two product lines appear below:
XactivePathbreakerDirect materials per unit$64.60$50.80Direct labor cost per unit$18.00$12.80Direct labor-hours per unit1.4DLHs1DLHsEstimated annual production and sales23,000units73,000units
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:
Estimated total manufacturing overhead$2,082,960Estimated total direct labor-hours105,200DLHs
Required:
1-a. Compute the predetermined overhead rate based on direct labor-hours.
1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product.
2. 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:
Estimated Overhead CostExpected ActivityActivity Cost Pools and Activity MeasuresXactivePathbreakerTotalSupporting direct labor (direct labor-hours)$752,18032,20073,000105,200Batch setups (setups)608,000240140380Product sustaining (number of products)654,140112General factory (machine-hours)68,6402,3007,3009,600Total manufacturing overhead cost$2,082,960
the predetermined overhead rate is 19.80 per DLH
Determine the activity rate for each of the four activity cost pools.
3. Using the activity rates and other data from the problem, determine the unit product cost of each product.
a. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product
b. Determine the activity rate for each of the four activity cost pools.(Round your "per DLH" and "per MHR" answers to 2 decimal places.)
c. Using the activity rates and other data from the problem, determine the unit product cost of each product.(Round your intermediate calculations and final answers to 2 decimal places.)
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