Question
Rocky Mountain Corporation makes two types of hiking bootsXactive and the Pathbreaker. Data concerning these two product lines appear below: Xactive Pathbreaker Direct materials per
Rocky Mountain Corporation makes two types of hiking bootsXactive and the Pathbreaker. Data concerning these two product lines appear below: |
Xactive | Pathbreaker | |||||
Direct materials per unit | $ | 64.10 | $ | 50.30 | ||
Direct labor cost per unit | $ | 17.50 | $ | 12.30 | ||
Direct labor-hours per unit | 1.4 | DLHs | 1 | DLHs | ||
Estimated annual production and sales | 18,000 | units | 68,000 | units | ||
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 | $1,798,760 | |
Estimated total direct labor-hours | 93,200 | DLHs |
Required: |
1-a. | Compute the predetermined overhead rate based on direct labor-hours. (Round the intermediate calculations and final answer to two decimal places.) |
Predetermined overhead rate | $ per DLH |
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.) |
Xactive | Pathbreaker | |
Unit product cost | $ | $ |
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 | ||||
Activities and Activity Measures | Xactive | Pathbreaker | Total | ||
Supporting direct labor (direct labor-hours) | $ | 643,080 | 25,200 | 68,000 | 93,200 |
Batch setups (setups) | 445,500 | 215 | 115 | 330 | |
Product sustaining (number of products) | 650,840 | 1 | 1 | 2 | |
General factory (machine-hours) | 59,340 | 1,800 | 6,800 | 8,600 | |
Total manufacturing overhead cost | $ | 1,798,760 | |||
Determine the activity rate for each of the four activity cost pools. (Round your final answers to 2 decimal places.) |
Activity Cost Pools | Activity Rate | |
Supporting direct labor | $ | per DLH |
Batch setups | $ | per setup |
Product sustaining | $ | per product |
General factory | $ | per MH |
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.) |
Xactive | Pathbreaker | |
Unit product cost | $ | $ |
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