Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price

Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below:

Xtreme Pathfinder
Selling price per unit $ 141.00 $ 91.00
Direct materials per unit $ 64.50 $ 52.00
Direct labor per unit $ 17.00 $ 10.00
Direct labor-hours per unit 1.7 DLHs 1.0 DLHs
Estimated annual production and sales 23,000 units 74,000 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$2,714,400 Estimated total direct labor-hours 113,100DLHs

Required:

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):

Activities and Activity Measures Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 791,700 39,100 74,000 113,100
Batch setups (setups) 1,062,000 340 250 590
Product sustaining (number of products) 790,000 1 1 2
Other 70,700 NA NA NA
Total manufacturing overhead cost $ 2,714,400

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.

Xtreme Pathfinder Total
% of % of
Amount Total Amount Amount Total Amount Amount
Traditional Cost System
% %
% %
% %
Total cost assigned to products $0 $0 $0
Xtreme Pathfinder Total
% of % of
Amount Total Amount Amount Total Amount Amount
Activity-Based Costing System
Direct costs:
% %
% %
Indirect costs:
% %
% %
% %
Total cost assigned to products $0 $0 $0
Costs not assigned to products:
Total cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Should you buy or sell the stock? LO.1

Answered: 1 week ago

Question

=+b) Form the F-statistic by dividing the two mean squares.

Answered: 1 week ago

Question

Describe several uses for a position description.

Answered: 1 week ago