Maurice Tutor

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Category > Accounting Posted 02 Aug 2017 My Price 12.00

Smoky Mountain Corporation

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

 

  Xactive Pathbreaker
Selling price per unit $ 127.00   $ 89.00  
Direct materials per unit $ 64.80   $ 51.00  
Direct labor per unit $ 18.20   $ 13.00  
Direct labor-hours per unit   1.4 DLHs   1.0 DLHs
Estimated annual production and sales   25,000 units   75,000 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 $2,200,000
Estimated total direct labor-hours 110,000 DLHs

Requirement 1:
(a)
Calculate the predetermined overhead rate. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Predetermined overhead rate $

(b)
Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Negative amount should be indicated by a minus sign. Round your predetermined overhead rate to 2 decimal places. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

Xtreme
Product margin - ?

 

Pathfinder

Product margin - ?

Requirement 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

Expected Activity
Activities and Activity Measures Overhead Cost Xactive Pathbreaker Total
Supporting direct labor (direct labor-hours) $ 797,500 35,000 75,000 110,000
Batch setups (setups)   680,000 250 150 400
Product sustaining (number of products)   650,000 1 1 2
Other   72,500 NA NA NA
 
     
Total manufacturing overhead cost $ 2,200,000      
 
     

 

 

 



Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative amount should be indicated by a minus sign. Do not round your intermediate calculations. Omit the "$" sign in your response.)

Xtreme
Product margin - ?

Pathfinder
Product margin -?

 

Requirement 3:
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round your intermediate calculations. Round your predetermined overhead rate to 2 decimal places. Round your percentage values to 1 decimal places and round all other values to the nearest whole number. Omit the "$" & "%" signs in your response.)

  Xactive Pathbreaker Total
  Amount % of
Total Amount		 Amount % of
Total Amount		 Amount
Traditional Cost System          
(Click to select)Supporting direct laborSelling and administrativeOtherDirect materialsBatch setupsProduct sustaining $ % $ % $
(Click to select)Direct laborBatch setupsOtherProduct sustainingSelling and administrativeSupporting direct labor   %   %  
(Click to select)OtherManufacturing overheadSelling and administrativeProduct sustainingBatch setupsSupporting direct labor   %   %  
 
 
 
Total cost assigned to products $   $   $
 
 
 
           
Activity-Based Costing System          
Direct costs:          
(Click to select)Batch setupsSelling and administrativeSupporting direct laborProduct sustainingDirect materialsManufacturing overhead $ % $ % $
(Click to select)Supporting direct laborBatch setupsSelling and administrativeManufacturing overheadProduct sustainingDirect laborOther   %   %  
Indirect costs:          
(Click to select)Direct laborOtherSelling and administrativeManufacturing overheadDirect materialsSupporting direct labor   %   %  
(Click to select)Manufacturing overheadOtherSelling and administrativeBatch setupsDirect laborDirect materials   %   %  
(Click to select)OtherSelling and administrativeDirect laborManufacturing overheadProduct sustainingDirect materials   %   %  
 
 
 
Total cost assigned to products $   $   $
 
 
   
Costs not assigned to products:          
(Click to select)Direct laborDirect materialsSupporting direct laborBatch setupsOtherProduct sustaining          
         
Total cost         $
 

 

Answers

Maurice Tutor
(5)
Status NEW Posted 02 Aug 2017 11:08 AM My Price 12.00

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