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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Rocky Mountain Corporation makes two types of hiking boots—Xactive and the Pathbreaker. Data concerning these two product lines appear below:
| Â | Xactive | Pathbreaker | ||||
| Direct materials per unit | $ | 65.20 | Â | $ | 51.40 | Â |
| Direct labor cost per unit | $ | 18.60 | Â | $ | 13.40 | Â |
| Direct labor-hours per unit | Â | 1.4 | DLHs | Â | 1 | DLHs |
| Estimated annual production and sales | Â | 29,000 | units | Â | 79,000 | units |
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|
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: |
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| Â | Â | Â |
| Estimated total manufacturing overhead | $2,439,840 | Â |
| Estimated total direct labor-hours | 119,600 | DLHs |
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| Required: |
| 1-a. | Compute the predetermined overhead rate based on direct labor-hours. (Round the intermediate calculations and final answer to two decimal places.) | |
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| Predetermined overhead rate | $ per DLH |
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| 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.) | |
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| Â | Xactive | Pathbreaker |
| Unit product cost | $ | $ |
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| 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: |
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| Â | Estimated Overhead Cost | Expected Activity | |||
| Â | |||||
| Activities and Activity Measures | Xactive | Pathbreaker | Total | ||
| Supporting direct labor (direct labor-hours) | $ | 891,020 | 40,600 | 79,000 | 119,600 |
| Batch setups (setups) | Â | 836,000 | 270 | 170 | 440 |
| Product sustaining (number of products) | Â | 632,360 | 1 | 1 | 2 |
| General factory (machine-hours) | Â | 80,460 | 2,900 | 7,900 | 10,800 |
| Â | Â | Â | Â | ||
| Total manufacturing overhead cost | $ | 2,439,840 | Â | Â | Â |
| Â | Â | Â | Â | ||
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| Â | Determine the activity rate for each of the four activity cost pools. (Round your final answers to 2 decimal places.) |
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| Activity Cost Pools | Activity Rate | |
| Supporting direct labor | $ | per DLH |
| Batch setups | $ | per setup |
| Product sustaining | $ | per product |
| General factory | $ | per MH |
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| 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.) |
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| Â | Xactive | Pathbreaker |
| Unit product cost | $ | $ |
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