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 | $ | 64.30 | $ | 50.50 | ||
| Direct labor cost per unit | $ | 17.70 | $ | 12.50 | ||
| Direct labor-hours per unit | 1.4 | DLHs | 1 | DLHs | ||
| Estimated annual production and sales | 20,000 | units | 70,000 | 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 | $1,911,000 | |
| Estimated total direct labor-hours | 98,000 | 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) | $ | 686,000 | 28,000 | 70,000 | 98,000 |
| Batch setups (setups) | 507,500 | 225 | 125 | 350 | |
| Product sustaining (number of products) | 654,500 | 1 | 1 | 2 | |
| General factory (machine-hours) | 63,000 | 2,000 | 7,000 | 9,000 | |
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| Total manufacturing overhead cost | $ | 1,911,000 | |||
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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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Auditing Practices In Local Governments An International Comparison
Authors: Laurence Ferry, Pasquale Ruggiero
1st Edition
180117086X, 978-1801170864
