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Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the...

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Accounting

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system.

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 Overhead Cost Expected Activity
Activities and Activity Measures Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 629,920 28,600 73,000 101,600
Batch setups (setups) 768,000 260 220 480
Product sustaining (number of products) 710,000 1 1 2
Other 25,680 NA NA NA
Total manufacturing overhead cost $ 2,133,600

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

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