Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 $ 115.00 $ 83.00
Direct materials per unit $ 65.10 $ 50.00
Direct labor per unit $ 10.00 $ 10.00
Direct labor-hours per unit 1.0 DLHs 1.0 DLHs
Estimated annual production and sales 29,000 units 71,000 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 $ 1,800,000
Estimated total direct labor-hours 100,000 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

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 Activity
Activities and Activity Measures Overhead Cost Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 520,000 29,000 71,000 100,000
Batch setups (setups) 781,000 400 310 710
Product sustaining (number of products) 440,000 1 1 2
Other 59,000 NA NA NA
Total manufacturing overhead cost $ 1,800,000

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative product margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.)

xtreme pathfinder total

product margin

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

A Guide To Local Environmental Auditing

Authors: Hugh Barton; Noel Bruder

1st Edition

1853832340, 9781853832345

More Books

Students also viewed these Accounting questions

Question

4. Identify the challenges facing todays organizations

Answered: 1 week ago