Question
Smoky Mountain Corporation makes two types of hiking bootsXtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per
Smoky Mountain Corporation makes two types of hiking bootsXtreme and the Pathfinder. Data concerning these two product lines appear below:
Xtreme Pathfinder
Selling price per unit $ 124.00 $ 88.00
Direct materials per unit $ 63.40 $ 53.00
Direct labor per unit $ 14.40 $ 8.00
Direct labor-hours per unit 1.8 DLHs 1.0 DLHs
Estimated annual production and sales 23,000 units 70,000 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 $ 2,005,200
Estimated total direct labor-hours 111,400 DLHs
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system. (Do not round your intermediate calculations.)
Xtreme Pathfinder Total
Product margin
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