Question
Rocky Mountain Corporation makes two types of hiking bootsXactive and Pathbreaker. Data concerning these two product lines appear below: Xactive Pathbreaker Direct materials per unit
Rocky Mountain Corporation makes two types of hiking bootsXactive and Pathbreaker. Data concerning these two product lines appear below: |
Xactive | Pathbreaker | |||||
Direct materials per unit | $ | 65.30 | $ | 51.50 | ||
Direct labor cost per unit | $ | 18.70 | $ | 13.50 | ||
Direct labor-hours per unit | 1.4 | DLHs | 1 | DLHs | ||
Estimated annual production and sales | 30,000 | units | 80,000 | units | ||
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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 | $2,501,000 | |
Estimated total direct labor-hours | 122,000 | DLHs |
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Required: |
1-a. | Compute the predetermined overhead rate based on direct labor-hours. (Round the intermediate calculations and final answer to two decimal places.) | |
1-b. | Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.) | |
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 Cost | Expected Activity | ||||
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Activity Cost Pools and Activity Measures | Xactive | Pathbreaker | Total | ||
Supporting direct labor (direct labor-hours) | $ | 915,000 | 42,000 | 80,000 | 122,000 |
Batch setups (setups) | 877,500 | 275 | 175 | 450 | |
Product sustaining (number of products) | 626,000 | 1 | 1 | 2 | |
General factory (machine-hours) | 82,500 | 3,000 | 8,000 | 11,000 | |
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Total manufacturing overhead cost | $ | 2,501,000 | |||
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Determine the activity rate for each of the four activity cost pools. (Round your final answers to 2 decimal places.) | |
3. | Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.)
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