Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 115.00 $ 65.50 $ 13.60 1.7 DLHS 33,000 units Pathfinder $ 84.00 $ 54.00 $ 8.00 1.0 DLHS 61,000 units The company has a traditional 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 Estimated total direct labor-hours $ 1,756,500 117, 100 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs): Estimated Overhead Cost $ 526,950 790,000 400,000 39,550 $ 1,756,500 Expected Activity Xtreme Pathfinder Total 56,100 61,000 117,100 440 790 Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost 350 NA NA Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) Pathfinder Xtreme 292,380 Total 292,380 Product margin $ $ Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.) Total Xtreme % of Amount Total Amount Pathfinder % of Amount Total Amount Amount Traditional Cost System Direct labor Direct materials Manufacturing overhead Total cost assigned to products 2,161,500 3,294,000 5,455,500 $ 2,161,500 $ 3.294,000 $ 5,455,500 Total Xtreme % of Amount Total Amount Pathfinder % of Amount Total Amount Amount % % Activity-Based Costing System Direct costs Direct materials Direct labor Indirect costs Supporting direct labor Batch setups Product sustaining Total cost assigned to products Costs not assigned to products: Selling and administrative $ Total cost Required 2 Required 3 >
